FX.co ★ Yen Jumps on Intervention Fears

The Japanese yen strengthened beyond 161.5 per dollar on Friday, fully reversing its losses from earlier in the week as traders stayed alert to the risk of official intervention after the currency recently sank to fresh 40-year lows. Market participants are now awaiting intervention data due later this month to gauge whether Japanese authorities were behind the sharp but brief yen rallies seen in recent weeks.

Investors also evaluated data showing that Japan’s producer prices rose 7.1% in June, the fastest annual pace since March 2023, underscoring persistent cost pressures stemming from the Middle East conflict and the yen’s steep depreciation.

At the same time, oil prices pulled back after reports indicated that the US and Iran will continue peace talks despite a recent escalation in hostilities. That development weighed on the dollar and US Treasury yields, while easing some pressure on the yen by tempering concerns over import costs for Japan, which remains heavily reliant on Middle Eastern oil.