Yen nears 160 per dollar as effect of US-Japan action fades
What's next: A break above 160 could raise the odds of another intervention, with traders watching US inflation data and the BOJ's September meeting.
The yen drifted back toward 160 per US dollar on Tuesday and Wednesday, giving up about half the gains from a rare coordinated US-Japan intervention late last month. It traded around 159.1 to 159.4 per dollar after briefly strengthening to about 155 in early August, following a slide to a 40-year low near 164.
Analysts said the move shows intervention alone has not overcome the forces weighing on Japan's currency, especially the wide gap between US and Japanese yields. The 10-year US Treasury yield was about 4.686%, versus 2.846% for 10-year Japanese government bonds, preserving the appeal of yen-funded carry trades. Strategists also pointed to higher oil prices and Japan's energy-import needs as added pressure. Markets are now focused on US inflation figures this week and the Bank of Japan's next policy meeting in September.