Yen traders facing renewed potential intervention must overcome a number of hurdles before coming into conflict with the Bank of Japan (BOJ) on the last day of the month.
Despite the boost from the apparent intervention and a favorable drop in U.S. bond yields that weighed on the broader dollar, the yen still closed less than 2% higher against the greenback last week, suggesting the yen needs more help from Japanese authorities to finally break out of its downtrend.
The yen’s 11% decline this year is adding to inflationary pressures in Japan, leaving open the possibility that the BOJ will raise interest rates on July 31 for the second time since 2007. Traders are focusing on data out Friday that is expected to show the country’s inflation rate rose slightly to 2.9% in June, according to a Bloomberg survey of economists. That’s well above the BOJ’s 2% target.
