FOREX-Yen weaker as focus on possible intervention increases

The Bank of Japan raised interest rates on Friday to their highest level in 31 years, 1.25%, but two dissenting votes and a lack of explicitly hawkish guidance left investors reluctant to buy the currency.

On the heels of the rate decision, the yen fell sharply before a slight rebound as the Nikkei newspaper reported that Japanese officials had conducted rate checks, often seen as a precursor to currency intervention.

"With Japan on holiday, people think about what happened in late April, early May when they were on holiday, they intervened. I don't think that intervention at 157, 157 and a half is very likely," said Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York.

"But the markets are a bit nervous, we've been up to the mid-158, and so I think we're range-bound, as long as the US rates are firm. I know oil is down, but it's still relatively high and the US is still the least ugly in the ugly contest."