NEW YORK, June 27 — The yen, weakened by the Japanese government’s easy monetary policy, hit a 38-year low against the dollar on Wednesday, sparking speculation about a new intervention by authorities.
Stocks on Wall Street eked out small gains after a choppy session that saw big moves in some individual stocks after corporate earnings, while those elsewhere were mostly lower.
The yen slid as far as 160.75 against the greenback, before paring some of its losses.
Despite sliding through the 160 level, there was no indication that authorities had intervened to support the yen, said market analyst David Morrison at Trade Nation.
“This being the case, it’s possible that traders work to push the yen lower in a renewed attempt to test the resolve of the Japanese authorities,” he said.
The Asian country’s top currency official has said authorities were ready to act 24 hours a day if the unit fell too far, but some investors have said they suspect the new trigger may be 165 yen to the dollar.
Billions were pumped in to support the yen after it hit a 34-year low of 160.17 in late April, but with limited effect.
“If the Japanese finance ministry sees FX (foreign exchange) intervention as a waste of money, then they may let the yen continue to weaken, and leave it up to the BOJ (Bank of Japan) at the end of July to boost the yen with monetary policy tightening,” said XTB’s Research Director Kathleen Brooks.
The euro also remained under pressure before weekend elections in France that polls suggest will see big wins for far-right and left-wing parties, pushing President Emmanuel Macron’s pro-business centrists into third.
The Paris stock market finished the day down 0.7 per cent. Eurozone peer Frankfurt fell 0.1 per cent after a key survey showing German consumers are feeling more pessimistic heading into July, rattled by stubborn inflation and economic uncertainty.
Preparing for inflation data
On Wall Street, the Dow Jones Industrial Average rose less than 0.1 per cent, while the broad-based S&P 500 gained 0.2 per cent and the tech-rich Nasdaq Composite Index climbed 0.5 per cent.
“It was not a heavy input day in terms of new news,” said Art Hogan of B. Riley Wealth Management.
He said investors were looking forward to the release of Personal Consumption Expenditures (PCE) consumer spending data on Friday, which the Federal Reserve uses when weighing interest rate decisions.
The US central bank recently voted to hold its key lending rate at a 23-year high, and penciled in just one cut for this year amid sticky inflation in the first quarter of the year.
Among individual stocks, shipping giant FedEx surged 15.5 per cent on Wednesday after reporting earnings that topped analysts’ estimates following job cuts and other measures to cull expenses.
The electric vehicle manufacturer Rivian Automotive soared more than 23 per cent after announcing that Volkswagen would invest up to USUS$5 billion in the electric vehicle maker.
While some firms saw gains, others fell: General Mills slid 4.6 per cent as it reported a 6 per cent drop in quarterly sales while price inflation hits demand.
Key figures around 2100 GMT
New York - Dow: UP less than 0.1 per cent at 39,127.80 points (close)
New York - S&P 500: UP 0.2 per cent at 5,477.90 (close)
New York - Nasdaq: UP 0.5 per cent at 17,805.16 (close)
London - FTSE 100: DOWN 0.3 per cent at 8,225.33 (close)
Paris - CAC 40: DOWN 0.7 per cent at 7,609.15 (close)
Frankfurt - DAX: DOWN 0.1 per cent at 18,155.24 (close)
EURO STOXX 50: DOWN 0.4 per cent at 4,915.94 (close)
Tokyo - Nikkei 225: UP 1.3 per cent at 39,667.07 (close)
Hong Kong - Hang Seng Index: UP 0.1 per cent at 18,089.93 (close)
Shanghai - Composite: UP 0.8 per cent at 2,972.53 (close)
Dollar/yen: UP at 160.73 yen from 159.68 yen on Tuesday
Euro/dollar: DOWN at US$1.0680 from US$1.0715
Euro/pound: UP at 84.57 pence from 84.43 pence
Pound/dollar: DOWN at US$1.2625 from US$1.2686
Brent North Sea Crude: UP 0.3 percent at US$85.25 per barrel
West Texas Intermediate: UP 0.1 percent at US$80.90 per barrel
— AFP
