Yen Rallies Amid Fx Intervention Possibility

(RTTNews) - The Japanese yen strengthened against other major currencies in the European session on Thursday, on anticipation that the U.S. and Japan will work together to intervene once more, the Japanese currency performs better.

The U.S.-Japan collaborative intervention to combat excessive volatility was acknowledged by Japan's Ministry of Finance (MoF) in late July.

Japan Finance Minister (FM) Satsuki Katayama's remarks that she spoke with US Treasury Secretary Scott Bessent and agreed that "orderly yen movements are critical for global market stability" have sparked new opportunities for U.S.-Japan intervention.

Financial markets appear certain that the Bank of Japan (BoJ) will raise interest rates during this month's policy meeting. Markets expect a possibility of 98 percent rate hike by BoJ in September's policy meeting.

As Tokyo continues to keep a careful eye on currency movements, Japan's Vice Finance Minister for International Affairs, Atsushi Mimura, reaffirmed today that authorities are still prepared to take action in the foreign exchange market.

Therefore, without confirming that any specific actions have already been taken, the remarks leave open the prospect of intervention by Japanese authorities.

The Japanese currency rose on Wednesday after the comments of the BoJ board member Hajime Takata.

Takata stated concerns over interest rates that the central bank should hike interest rates "nimbly" to combat growing inflationary pressures.

Markets are now focusing on Friday's US nonfarm payrolls report. After an unexpected drop of 23,000 jobs in July, the economists predict 56,000 additional jobs in August. It is anticipated that the unemployment rate would stay at 4.1%.

In other economic news, data from S&P Global showed that the services sector in Japan continued to expand in August, and at a faster pace, the latest survey revealed on Thursday with a Purchasing Managers Index score of 52.5. That's up from 51.2 in July.

The survey also showed that the composite index improved to 53.5 in August from 52.7 in July.

In the European trading today, the yen rose to 1-month highs of 181.48 against the euro, 210.99 against the pound, 156.36 against the U.S. dollar and 193.10 against the Swiss franc, from early lows of 184.18, 214.33, 158.97 and 195.57, respectively. If the yen extends its uptrend, it is likely to find resistance around 179.00 against the euro, 209.00 against the pound, 155.00 against the greenback and 190.00 against the franc.

Against the Australia and the Canadian dollars, the yen advanced to near 4-week highs of 112.14 and 113.14 from early lows of 113.91 and 114.88, respectively. The yen may test resistance around 109.00 against the aussie and 110.00 against the loonie.

The yen climbed to a 2-month high of 91.66 against the NZ dollar, from an early low of 93.05. On the upside, 90.00 is seen as the next resistance levels for the yen.

Looking ahead, Canada and U.S. trade data for July, U.S. weekly jobless claims data, Canada and U.S. S&P Global PMI reports for August are slated for release.