Key facts
- The Japanese yen surged significantly after coordinated intervention by Japan and the U.S.
- Oil prices dropped sharply due to expectations of a Middle East peace deal.
- The yen reached an intraday high of 156.01 against the dollar.
- The euro and sterling also advanced against the dollar following the yen's move.
The Japanese yen surged against the dollar on Monday, with traders on alert for further intervention by Japanese authorities after Tokyo confirmed coordinated yen-buying intervention with the United States last week. The yen rose more than 1% to an intraday high of 155.20, its strongest level since early May, after having traded near 40-year lows. Japan's finance ministry could not immediately be reached for comment.
Analysts noted that joint foreign exchange intervention can be effective. However, they also cautioned that a change in underlying fundamentals would be needed for these moves to be sustainable, and that the market might challenge these actions once they are perceived to be complete, leading to increased short-term volatility. Some strategists believe the authorities are serious about supporting the yen and that the momentum could last until October if the Bank of Japan raises interest rates.
Oil prices fell sharply, with Brent crude futures dropping more than 6% to $82.41, after U.S. President Donald Trump announced he had called off an attack on Iran and that talks between the two sides would occur. The dollar index was little changed, having slid more than 1.5% last week. The euro rose to a 1-1/2-month high of $1.1559 early in Asia, while sterling hovered near a two-week top at $1.3484.