Yen Weakens Past 162 per Dollar as Traders Test Intervention Resolve

The Japanese yen weakened on Tuesday, trading on the weaker side of 162 per dollar as market participants tested the resolve of Japanese authorities to support the currency. The move keeps the yen near multi-decade lows and reflects growing speculation that officials may not immediately intervene.

Yen Under Pressure

The yen's decline was broad-based, with the currency also languishing near its lowest level against the British pound since 2007, at 217.09. Against the euro, the yen traded at 185.47 following a 0.5% rise for the single currency in the previous session.

According to Lee Hardman, a senior currency analyst at MUFG, the yen's recent losses were partly due to a lack of official action. "There had been speculation at the end of last week that Japan could intervene again to support the yen during the U.S. holiday when trading conditions were less liquid, but no action has been taken," Hardman noted.

Dollar Softens on Fed Outlook

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While the yen weakened on its own accord, the broader U.S. dollar was on softer footing against a basket of currencies, trading at 100.86. The dollar's shakiness follows a recent U.S. jobs report that came in below expectations, prompting investors to scale back bets on Federal Reserve rate hikes.

Markets are now pricing in approximately 29 basis points of Fed rate cuts by December, a decrease from about 38 basis points a week ago, according to Reuters data. This shift has provided some support for other major currencies, with the euro rising to $1.1442 and the British pound reaching a more than two-week high of $1.34005.

Market Focus Turns to FOMC Minutes

Investors are now awaiting the minutes from the Federal Open Market Committee’s (FOMC) June meeting, scheduled for release on Wednesday, for further insight into the central bank's policy outlook. However, Carol Kong, a currency strategist at Commonwealth Bank of Australia, suggested the minutes may be "less informative than previous minutes," given that Fed Chair Kevin Warsh does not favor providing explicit forward guidance.