Yen Fades Intervention Impact as Australia Holds Rates Steady

The yen is hovering near the key 160-per-dollar level as the impact of US-Japan intervention fades. The Japanese currency weakened by 0.9% on Monday and has surrendered nearly half of its gains since the rare intervention at the end of July.

Masayuki Nakajima, a senior strategist at Mizuho, notes that Japan's Obon holiday period may lower liquidity and increase the risk of sharp market moves during thin trading hours. If the dollar breaks decisively above 160 yen, concerns about intervention could intensify further.

Speculators have cut bearish yen bets by the most in over 12 years, with net short yen positions falling to $3.604 billion in the week ending August 4.