On Friday, the dollar reached the notable 150 level against the yen, driven by the 10-year Treasury yield briefly hitting 5% late on Thursday. Investors were positioning themselves in anticipation of the Federal Reserve keeping rates elevated for an extended period.
Exceeding the 150 threshold is perceived in the market as potentially prompting intervention by Japanese monetary officials, who are wary of the currency depreciating too significantly.
On October 3, it peaked at 150.165 before retracting to 147.3. However, market observers are uncertain whether this movement was instigated by intervention from the Ministry of Finance (MOF) or if it was a result of market jitters, a triggered trade stop loss, or other automated trades.
Jeremy Stretch, head of G10 currency strategy at CIBC Capital Markets, highlighted, “The market is obviously very mindful that the 150 threshold that we’re close to again this morning is a potential precursor for the uncertainty of having the MOF on the other side of it.”
Analysts suggest that the velocity of the movement and how much it surpasses the 150 level will likely be determining factors in whether the Ministry of Finance intervenes.
As of the latest update, the dollar had risen by 0.09% on the day, reaching 149.91 yen.
The momentum of the dollar rally has slowed down since the index peaked at a 10-month high on Oct. 3. Some analysts posit that this deceleration may be attributed to the overcrowding of investors holding dollars.