Yen Holds Gains from Coordinated Intervention with Washington

The Japanese yen has been holding onto its gains from last week's coordinated intervention by Tokyo and Washington. The rare move saw Japan confirm joint yen-buying intervention with the US, which appears to be signaling to the market not to short the yen.

Against the dollar, the yen slipped 0.38% to 157.79 per dollar on Tuesday, but still remained well above its 40-year low of 163.99 touched in July. The joint action by Japan and the US has made yen short positioning particularly risky given the risk of intervention by Japanese and US monetary authorities.

Analysts at TS Lombard said that despite the unusual nature of multilateral currency interventions, the underlying outlook of the yen has not changed. They believe that the pair will end the year higher than current levels.