The dollar slipped against the yen to the levels reached after the March earthquake, touching 77.29. Immediately USDJPY surged to 77.01 within a minute. There were rumours of an intervention in the FX markets by the Bank of Japan to curb yen strength as they did last week but these rumours were dismissed.
Traders said the dollar/yen was probably lifted by a large bank or sovereign buyer, taking the opportunity of the cheap dollar and to purchased on the dip.
In the past week the yen has been gaining strength despite the August 4 Bank of Japan intervention to curb yen strength that is hurting Japan’s exports. However, the dollar slipped further against the yen on deepening worries over the health of the global economy due to the slow US recovery and eurozone debt crisis.
The safe-haven yen has stayed strong as global investors have dumped US and European stocks to find secure a place to protect their wealth.
Recently, Japanese Finance Minister Yoshihiko Noda has repeatedly said that he is closely watching the markets, and saying that the movements in the markets are “one-sided” .