Yen's weekly slide revives talk of fresh intervention

The yen is on track for its steepest weekly decline in three months, erasing roughly half of the gains triggered by coordinated U.S.-Japan intervention in late July and early August. The currency slipped about 1% this week to 159.43 per dollar, with traders eyeing the 160 level as a potential trigger for renewed official action.

Before the intervention, the yen had been trading near 164 per dollar and at near four-decade lows, pressured by persistently low interest rates and growing concerns over government spending. The currency's 0.8% weekly fall against the euro to 183.91 is the largest since April.

Markets are now pricing in a 76% chance of a Bank of Japan rate hike in September, up sharply from 24% on July 30, according to Tokyo Tanshi data. However, analysts caution that intervention alone cannot reverse the yen's trend without a more hawkish BOJ stance.

"The onus is on BOJ to step up," said Sim Moh Siong, strategist at OCBC. Former Tokyo currency diplomat Mitsuhiro Furusawa told Varta Wire that Japan may conduct more joint intervention "at any time" and signal faster-than-expected rate hikes.

Elsewhere, the dollar found support from higher oil prices and Middle East tension, offset by benign U.S. jobs and inflation data that reduced expectations for a September rate hike to roughly 35%. The euro edged 0.2% lower to $1.1536, while sterling was flat at $1.3489. The Australian dollar hovered at $0.7060, and the yuan traded near a 3-1/2-year high at 6.7452 in offshore markets.

South Korea's won, also supported by official intervention last month, held steadier than the yen but was set for a modest 0.6% weekly loss. Some investors remain skeptical of intervention's durability. "Interventions, even if coordinated and powerful, are at best temporary," said Omar Slim of MetLife Investment Management.