Yen Jumps After Reported BOJ Intervention; Dollar Records Sharp Daily Decline

The Japanese yen strengthened on Thursday after Nikkei Asia reported that Japanese authorities intervened in the foreign exchange market by buying yen and selling U.S. dollars. USD/JPY fell 2.2% to 159.70, while the U.S. Dollar Index dropped 1% to 99.86.

The move came after USD/JPY traded above the 160 level, an area closely watched by market participants. Japan has previously intervened in the currency market to address excessive exchange-rate volatility. Finance Minister Satsuki Katayama had earlier said authorities were prepared to take appropriate action against speculative currency moves.

Meanwhile, the Federal Reserve left interest rates unchanged on Wednesday. Three regional Fed officials dissented in favor of a rate hike, highlighting differing views within the central bank. Fed Chair Kevin Warsh said policymakers had extensive discussions but downplayed the significance of the dissents.

In Europe, the euro rose 0.5% after Eurozone second-quarter GDP expanded 0.4% quarter-on-quarter, exceeding market expectations. Sterling also gained after the Bank of England kept interest rates unchanged.

Market participants will continue to monitor comments from Japanese authorities and Federal Reserve officials for further signals on currency and interest-rate developments.

Source: Reuters, Nikkei Asia.