LONDON, July 17 (Reuters) - The yen strengthened steadily against the dollar on Wednesday, putting traders on alert to the prospect of official buying from Tokyo, after Japanese authorities last week likely stepped in to haul the currency away from 38-year lows.
The dollar was last down 0.99% at 156.7, its lowest in around a month. JPY=EBS The euro was also down 0.9%. EURJPY=EBS
Bank of Japan data released on Tuesday suggested Tokyo may have spent 2.14 trillion yen ($13.5 billion) intervening on Friday last week. Combined with the estimated amount spent on Thursday, Japan is suspected to have bought nearly 6 trillion yen via intervention last week.
Analysts and traders were not certain what was behind the move, but said market volatility could be disrupting 'carry trades' that had been a factor in the yen's weakness.
"With volatility coming back, I think that there will be more carry trades unwinding," said Hoe Lon Leng, global head of FX flow at Nomura in Singapore.
"When volatility is up and markets start to move ... you just want less exposure."
