The Yen hovered around the closely watched 160 mark on Tuesday, with the impact of coordinated US-Japan intervention proving short-lived.
Meanwhile, the Australian Dollar remained close to an eight-week high after the Reserve Bank of Australia (RBA) kept interest rates unchanged as widely expected.
The RBA left its cash rate at 4.35% but warned that further tightening could still be necessary. The central bank has already lifted rates by 75 basis points since February as it battles persistent inflation, compounded by rising energy costs.
The Australian dollar was little changed at $0.7054, holding near its highest level since mid-June following the RBA’s decision, Reuters reports.
The Yen traded around 159.20 per Dollar during Asian trading on Tuesday after sliding 0.9% on Monday, pulling further away from last week’s three-month high of 155.20 following the rare US-Japan intervention to support the currency at the end of July.
The coordinated intervention came after the Yen plunged to a 40-year low of 163.99 per Dollar. Since then, it has surrendered almost half of its gains, fuelling speculation among traders that another intervention may be only a matter of time.
Trading was subdued, with Japanese markets shut for a public holiday while investors remained alert for any fresh signs of currency-market intervention by authorities.
Speculators cut their bearish bets on the Yen by the largest amount in more than 12 years. Data from a US regulator showed that net short positions fell by $8.865 billion to $3.604 billion in the week ending 4th August.
Markets are now pricing in only a slightly better than 50% probability of a Bank of Japan rate hike, according to LSEG data. Meanwhile, the BOJ’s plans for further monetary tightening are facing additional hurdles from growing political pressure to shore up the bond market.
The US consumer price index report could shed light on how the Iran war is affecting inflationary pressures. Producer price data due on Thursday and retail sales figures on Friday are also expected to provide further insight into the inflation outlook.
The US Dollar was broadly unchanged, while oil prices hovered near one-week highs as hopes for a deal between Washington and Tehran to end the Middle East conflict continued to fade.
In addition, the Euro traded at $1.1544, while Sterling stood at $1.3509. The Chinese Yuan remained close to a three-and-a-half-year high against the US Dollar on Tuesday.