Yen falls sharply, dollar rises

Raw Trading Ltd

The yen fell to its lowest level this year against the dollar on Monday, falling below the key 145 level, while the dollar index returned to its highs.

The yen fell to 145.22 against the dollar in early Asian trading on Aug. 14 local time, its weakest level since Nov. 10, before quickly reversing course amid a volatile start to the week. It was last at 144.92, up 0.03%.

Low yields in Japan make the yen an easy target for short sellers and financing deals, while widening interest rate differentials between Japan and the U.S. have contributed to persistent yen weakness.

Japan intervened in currency markets last September when the dollar rose above 145 yen, prompting the Ministry of Finance (MOF) to buy yen and push the yen back to around 140 yen. The yen has fallen nearly 10 percent against the dollar this year.

IC Markets

Japanese authorities may have grown more patient after the latest monetary policy adjustment and deflationary trends in the US. "

The move above 145 in the JPY index may still be slow to crawl. "

With the yen hovering around that level again, traders expect Japanese officials to start warning of intervention soon, as they did in June.

ANZ analysts said the resilience of the US consumer will be in focus following the release of retail sales data for July, with higher fuel prices and tighter credit conditions expected to have an impact.

The U.S. dollar index , which measures the greenback against six currencies, rose 0.097% to 102.95, after touching a more than one-month high of 103.02

The euro was down 0.12% at $1.0931 and the pound was down 0.15% at $1.2675.

The Australian dollar was down 0.42% at $0.6470 and the New Zealand dollar was down 0.36% at $0.5963. Earlier in the session, both Australian currencies fell to their lowest levels since November. The currencies were weakened by disappointing trade and inflation data from China, the biggest buyer of its resource exports.

Chris Weston, head of research at Pepperstone, said that while sentiment towards China has eased, this week's high-frequency Chinese data may only need a small move to elicit a strong upward reaction in Chinese indicators.