The yen rose slightly on Wednesday, moving away from the closely watched 150 per dollar mark, after a short-lived surge in the previous session stoked speculation that Japanese authorities could have intervened to support the currency.
The Japanese currency was up around 0.12% at 148.93 per dollar JPY=EBS in early European trading, after unexpectedly surging nearly 2% at one point on Tuesday to 147.30. The spike came after it slipped to 150.165 per dollar, its weakest since October 2022.
Meanwhile the dollar index =USD , which tracks the greenback against six peers, was down 0.12% at 106.94. It remained close to the nearly 11-month high of 107.34 reached in the previous session.
The euro EUR=EBS rose 0.15% to $1.0483. But it did not stray far from Tuesday's low of $1.0448, its weakest level since December, triggering talk of a fall back to $1.
Japan's top currency diplomat, Masato Kanda, said he would not comment on whether Tokyo intervened in the exchange rate market overnight, although he said that "we have only taken steps that have the understanding of U.S. authorities".
Analysts were divided on the issue. "Them stepping in here would be perfectly consistent with recent warnings from top officials and past behaviour," said James Malcolm, head of FX strategy at UBS.
"Entering the market in size provides a strong signal and helps buy time for other things to fall into place that in the fullness of time then contribute to position unwinds."
Adam Cole, chief currency strategist at RBC Capital Markets, said: "For now my assumption is that that wasn't intervention, but just flows on the basis of breaking 150."
"I'm just going by the precedent they set when they intervened a year ago when they specifically stated that they had intervened almost immediately afterwards, and the fact that they haven't this time."
Japanese authorities last year intervened to prop up the yen for the first time since 1998.
The currency has slumped around 14% against the dollar this year as U.S. bond yields have risen sharply compared to their Japanese peers, with the Federal Reserve hiking rates to tame inflation while the Bank of Japan sticks to its ultra-loose monetary policy.
DOLLAR POWER The dollar was holding on to recent gains following upbeat data on Tuesday showing U.S. job openings unexpectedly increased in August, amid a surge in demand for workers in the professional and business services sector.
It has rallied around 3.5% over the last three months, boosted by a sharp rise in U.S. bond yields as growth has stayed strong and the Fed looks set to keep interest rates high for longer than previously expected.
The U.S. 30-year bond yield US30YT=RR hit 5% for the first time since 2007 on Wednesday. Yields move inversely to prices.
Sterling GBP=D3 rose 0.1% to $1.2088, after falling to a nearly seven-month low of $1.20535 in the previous session.
"Markets have been rattled by yet another positive U.S. data surprise vindicating the (Fed's) mantra of higher for longer," said Rodrigo Catril, senior FX strategist at National Australia Bank.
Elsewhere, the New Zealand dollar fell after its central bank held the cash rate steady at 5.5%, as policymakers grew more confident that past hikes were working to bring down inflation as desired.
The decision sent the kiwi NZD=D3 sliding more than 0.5% to a nearly one-month low of $0.5871. It last traded $0.5901, down 0.12%.
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