Dollar Retreats Against Yen Amid Intervention Fears

The US dollar retreated against the Japanese yen on Friday as traders remained cautious about potential intervention by authorities. The dollar dropped as much as 0.6% to 158.535 yen, but recovered to trade down 0.1% at 159.31 yen.

Traders are wary of a second round of intervention after the Japanese authorities stepped in on Thursday to prop up their currency. A US Treasury source informed banks that they may intervene in the yen market and should 'stand ready for future action.'

Eric Theoret, FX strategist at Scotiabank, noted that even the possibility of intervention can have a significant impact due to thin liquidity.