The yen hit a fresh 34-year low versus the dollar and a 16-year low against the euro on Thursday (Apr 24) as investors expect a Bank of Japan (BOJ) policy meeting that ends on Friday to not be hawkish enough to support the Japanese currency.
A man walks in front of an electronic board displaying the exchange rate for the Japanese yen against the US dollar along a street in Tokyo on Apr 25, 2024. Tokyo stocks opened lower on Apr 25 after the yen fell past a key level against the US dollar ahead of a two-day Bank of Japan policy meeting.
Some market participants see the 155 level as a line in the sand that will prompt Tokyo authorities to take action.Japanese authorities"are between a rock and a hard place", said Athanasios Vamvakidis, global head of G10 forex strategy at BofA. BOJ Governor Kazuo Ueda is expected to be mindful of an episode in 2022 when his predecessor's dovish remarks triggered a yen plunge that forced Tokyo to intervene to prop up the currency.
The dollar nursed some losses versus other currencies, however, after a slight tumble earlier in the week when upbeat business activity data in the euro zone and the United Kingdom lifted the euro and sterling. The dollar dipped 0.2 per cent to 105.59 against a basket of currencies, though it pulled away from a nearly two-week low hit in the previous session.
"Long dollars is quite a crowded trade, and a fairly sharp sell-off in the dollar earlier this week on the back of the soft US PMI readings served as a reminder that long dollar positions are not bulletproof."
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