LONDON (Reuters) – The dollar remained broadly stable, while the yen pared earlier losses after fresh comments from Japanese officials following two suspected dollar-selling interventions last week.
The Australian dollar fell from nearly two-month highs against the US currency after the Reserve Bank of Australia avoided issuing new hawkish signals as some traders had expected.
The dollar index – which measures the currency against six major peers – rose 0.1% to 105.24, after falling as low as 104.52 on Friday.
The index has gained nearly 4% since the start of the year, but lost nearly 1% last week after the Federal Reserve ruled out further rate hikes and signs of a slowing U.S. labor market emerged .
The dollar rose slightly against the yen to 154.46, after previously reaching 154.60 yen.
The US currency had fallen as low as 151.86 yen on Friday, with less-than-encouraging US jobs data fueling losses after Bank of Japan data suggested official intervention may have reached around 9 trillion of yen (58 billion dollars).
Japan’s Finance Ministry has not commented on its role in the dollar sell-off seen in Japan last week, but diplomat Masato Kanda reiterated that the government will “continue to take the same firm approach” to disorderly movements of the yen.
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Kanda also acknowledged that an orderly market would not require government intervention.
The carry trade remains an attraction, with the Federal Reserve’s rate cut likely to take some time and with the Bank of Japan taking a cautious approach to policy tightening after approving the first rate hike since 2007, leaving a wide gap of 360 basis points between long-term Japanese yields and their US counterparts.
The Aussie falls after the RBA’s decision, which kept rates unchanged, but the central bank did not restore the restrictive stance that some expected, given that inflation did not slow down as expected.
In a news conference held after the central bank’s expected decision, Governor Michele Bullock said the board believes monetary policy is at the right level to bring inflation back to target. The RBA hopes the economy will not face further rate hikes, Bullock added.
The Australian dollar lost 0.5% to $0.6593, down from Friday’s highs of $0.6650, a level previously seen on March 8.
(Translated by Luca Fratangelo, editing by Francesca Piscioneri)
