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The pair reached 159.95 - right up against the round 160 mark and the highest since September 2. Japanese Finance Ministry currency official Atsushi Mimura said markets should not forget about intervention risks, and the rate pulled back from that zone.
The yen weakens for the second day in a row after October US inflation data. The market has almost fully priced in a Fed rate hike in December, and less than a figure remains to the 160 level, near which Tokyo has already entered the market with interventions.
Bank of Japan Governor Kazuo Ueda speaks today, November 6, at 19:00 MSK. Japan's rate is currently 1.25% - the highest since April 1995, and Ueda is expected to hint whether the next move will come on December 18.
At 03:00 Moscow time on November 5, the Bank of Japan published the minutes of the September meeting: board members agreed that the rate should continue to be raised. The yen is strengthening for the second day in a row, USD/JPY slid to 158.25, EUR/JPY to 177.90.
The DXY dollar index fell to 101.40 (-0.44% for the day) after the Democrats took both chambers of Congress. Yet the yen failed to capitalize on this: USD/JPY holds near 158.32, having lost just 0.24%.
Japanese Finance Minister Satsuki Katayama said on Tuesday, October 27, that the government is ready for decisive action in the currency market. This is a direct hint at intervention - selling dollars from reserves to support the yen.
USD/JPY rose to 158.44, and the yen lost about 0.5% after the release of the Bank of Japan's summary of opinions. The market saw no signal in the document for a rate hike as early as October, and the absence of currency interventions further increased pressure on the yen.
