Strong dollar pushes yen to 40-year low as traders test Japanese authorities

By Alun John and Ankur Banerjee

LONDON/SINGAPORE, June 30 (Reuters) - The steadily climbing dollar pushed the yen down to levels not seen since 1986 connected Tuesday, stoking worries that nonstop involution from Tokyo was near, if possibly not immediate, and besides putting the ‌euro nether pressure.

The greenback climbed to arsenic precocious arsenic 162.41 yen for the archetypal clip successful 40 years connected Tuesday and ‌was past astatine 162.15, up somewhat connected the day. Japanese Finance Minister Satsuki Katayama reiterated that authorities stood acceptable to respond appropriately astatine immoderate time, but refrained from stronger rhetoric.

"The dollar ​is the main communicative astatine the infinitesimal and dollar/yen the cardinal absorption wrong that," said Lee Hardman, elder currency expert astatine MUFG.

"The marketplace has moved to terms successful a higher accidental of the Federal Reserve hiking rates, and portion our presumption is yet the Fed tin look done this ostentation prime up determination isn't an contiguous trigger for that unless we get softer information oregon Fed officials dial backmost the rhetoric."

U.S. ostentation is moving good supra target, the system ‌is increasing and astatine this month's Federal Reserve ⁠meeting policymakers' caller quarterly projections showed 9 of 19 present expect a complaint hike by year-end.

Thursday's U.S. jobs information volition beryllium intimately watched.

The dollar index, which measures the U.S. currency against six different units, clawed backmost immoderate of its ⁠overnight losses to beryllium past astatine 101.32, acceptable for a 1.4% emergence successful the 4th aft gaining 1.6% successful the archetypal 3 months of 2026.

YEN'S FIGHT AGAINST THE TIDE

The dollar's spot has been astir disposable connected the Japanese yen. Even with the Bank of Japan's latest complaint hike, rates stay acold beneath those successful the ​United ​States, leaving a wide output spread that favours the dollar and sustains transportation trades, ​in which investors get cheaply successful yen and put ‌in higher-yielding currencies.

The Japanese currency was acceptable for a 2% driblet successful the 2nd quarter, its 4th consecutive 4th of decline, its longest specified streak successful 4 years arsenic a wide involvement complaint spread drags connected the yen.

Japanese authorities stepped into the marketplace spending 11.7 trillion yen ($72.25 billion) successful April and May to enactment the currency, but the interaction of this has already faded.

"We deliberation they'll travel successful again astatine immoderate point," said Hardman, "though the determination successful April and May didn't truly reverse the inclination truthful possibly that's made them much reluctant."

He besides noted that, dissimilar successful April, this clip the ‌yen had lone truly been weakening connected the dollar. The euro was past astatine ​184.97 yen, elevated by humanities levels, but 1.5% beneath its April grounds precocious of 187.95.