What else is weighing on the US greenback?
Analysts mentioned the greenback’s latest weak spot displays broader considerations about Washington’s coverage path and investor confidence in US belongings, moderately than developments in Japan alone.
In any case, it stays unclear whether or not any joint motion by Japan and the US would sign a deliberate American choice for a weaker greenback, Mr Sim mentioned.
“That’s a hypothesis, and it will not be true,” he famous.
Earlier indicators of greenback weak spot emerged even earlier than hypothesis about yen intervention intensified.
The greenback got here underneath stress after US President Donald Trump threatened tariffs on some European international locations over Greenland, elevating fears of renewed commerce tensions.
Such uncertainty can cut back international traders’ urge for food for US belongings, together with equities and authorities bonds, which in flip weakens demand for the US greenback.
Trump’s Greenland risk, for example, triggered what is named a “triple sell-off”, with declines within the US greenback, equities and authorities bonds occurring on the similar time. This prompt traders have been reassessing the perceived security of US markets.
Then on Jan 27, Trump triggered a flight from the US greenback, pushing it to a near four-year low after he dismissed the dollar’s weak spot.
When requested by a reporter if he thought the worth of the greenback had declined an excessive amount of, Trump mentioned: “No, I believe it is nice, the worth of the greenback … greenback’s doing nice.” Merchants took his feedback as a sign to promote the dollar aggressively.
Trump’s feedback weren’t precisely new, however they got here at a time when the greenback had already been underneath stress.
“It exhibits there is a disaster of confidence within the US greenback, and it might seem that whereas the Trump administration sticks with its erratic commerce, international and financial coverage, this weak spot may persist,” mentioned Kyle Rodda, a senior market analyst at Capital.com.
“The weak greenback flies within the face of in any other case sturdy fundamentals. The US financial system stays distinctive and the greenback needs to be reflecting that,” mentioned Rodda.
“However due to Trump’s behaviour, it is not.”
Steve Englander, head of world G10 foreign money analysis at Normal Chartered in New York, mentioned foreign exchange merchants are “all the time searching for a development to leap on”.
“Usually officers push again towards abrupt foreign money strikes however when the president expresses indifference and even endorses the transfer, it emboldens USD sellers to maintain pushing,” he informed Reuters.
Mr Ng famous that the US greenback’s efficiency has been uneven. Whereas it fell towards some Asian currencies, it was not weakening towards others such because the rupee, peso or rupiah, reflecting variations in home financial situations and capital flows.
Actions in commodity costs, together with oil and gold, additionally have an effect on currencies otherwise, he mentioned.
