Yen Support Hints Spark Sharp Dollar Sell-Off

The dollar slipped to around 158.2 yen as traders digested fresh hints that Japan could intervene again to support the yen, with unusually explicit US encouragement.

The move was sharp: USD/JPY fell 2.4% on Thursday and another 0.8% to 158.225 on Friday.

CME Group said the volatility drove EBS spot-yen volumes to their highest in 10 years and futures volumes to a record, while Reuters cited a source saying the US Treasury told some banks to “stand ready for future action,”

Japan’s top currency diplomat was quoted as saying US backing went “beyond psychological support”, messaging that can move prices even before any dollars get sold.