A man looks at an electronic board showing the graphs of the recent fluctuations of the exchange rate between Japanese yen against the USA dollar (right) and the graphs of the Japan’s Nikkei average outside a brokerage in Tokyo February 29, 2016.
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Exporters’ shares were mixed as the yen trended away from its recent strength but remained volatile ahead of a highly-anticipated speech that US Federal Reserve Chair Janet Yellen will give later in the day.
LONDON, May 26 (Reuters) – An early surge in the yen in Asia on Thursday put a dampener on any further progress for the dollar after a bullish two weeks and spurred speculation U.S (Other OTC: UBGXF – news). investors are opposing any gains past 110.50 yen. It was last at 109.69, down 0.4 percent.
Some traders mentioned an interview with Masatsugu Asakawa, Japan’s vice-minister of finance for Global affairs, who told the Financial Times that direct currency intervention will remain in the ministry’s toolbox.
While Japanese authorities are not intervening on the currency at this stage, most traders believe officials might be forced to were the yen to strengthen to closer to 100 yen. It’s poised for a 0.1% loss for the week, but up 2.3% in May.
China’s CSI300 .CSI300 and Shanghai Composite .SSEC indices both slipped by 0.1 percent, set for declines of 0.6 percent and 0.3 percent respectively for the week.
In addition to talk of currency intervention, investors have been eager for any developments about the timing of Japan’s sales tax increase.
But he did not say whether that meant Japan had officially pledged to the worldwide community that it would go ahead with the increase.
Prime Minister Shinzo Abe is now expected to announce fiscal stimulus package after the G-7meeting and to delay sales tax hike.
“You have conflicting opinions coming out of the same government, and I think that’s creating some noise in the market”, said Jennifer Vail, head of fixed-income research at US Bank Wealth Management in Portland, Oregon.
Markets were also keeping an eye on the Group of Seven leaders summit meeting in Japan.
Tokyo stocks rose on Friday morning after Japanese inflation data showing monthly prices falling and media reports about a consumption tax hike delay bolstered hopes of extra Bank of Japan stimulus measures.
The dollar index was up 0.3 per cent at 95.618, not far from the two-month high of 95.660 climbed overnight after data showed new U.S. single-family home sales surged to a more than eight-year peak in April and prices hit a record high.
The greenback had rallied earlier in the week on growing expectations the Federal Reserve will raise interest rates as soon as June or July, supported by a series of comments from Fed officials seemingly backing such a move.
The upbeat housing numbers backed the Fed’s April policy meeting minutes, released last week, which hinted that the central bank may raise rates soon if the economy appeared strong enough.
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The euro treaded water at $1.1190 EUR= following Thursday’s 0.3 percent gain.
