The Japanese yen JPY= strengthened 0.5% to 156.49 per U.S. dollar after a sudden move earlier in the day to its strongest since early May of 155.2, putting traders on alert for another bout of intervention.
Japan and the U.S. conducted coordinated yen-buying intervention and will not hesitate to take further action, Japan's finance ministry said on Monday, confirming a rare bilateral action to halt the yen's slide to fresh 40-year lows.
U.S. Treasury Secretary Scott Bessent also said the United States would consider increasing in coming months the size of the Federal Reserve's repurchase facility providing temporary dollar liquidity, calling the tool an "important backstop".
"Bessent's comments arguably carry more weight than the intervention itself," said Matt Simpson, senior market analyst at StoneX. "It feels like a safe bet that the Japanese yen has troughed for the year. The words 'joint intervention' carries a lot of weight in these markets and is a term rarely used."
Trump said on Sunday the United States was helping Japan prop up the yen as a sign of friendship and to help the world economy.
Tokyo's solo intervention conducted between late April and early May caused only a brief yen rebound, while a rate hike in June by the Bank of Japan provided little boost, underscoring the challenge facing policymakers with rising oil prices and a wide interest-rate differential against other major economies.
The yen had been rooted near 40-year lows of 163.99 per U.S. dollar in recent weeks before the latest bout of interventions, with net short positions on the yen of roughly $12.5 billion, the highest in two years, data from a U.S. regulator showed.
"Near term, 155 remains the key level to watch, having effectively served as the market floor/resistance post May intervention this year," said Masahiko Loo, senior fixed income strategist at State Street Investment Management.
The action and comments from Bessent repeating his calls for further interest-rate hikes by the BOJ have put monetary policy in focus.
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