(Jan 26): The yen extended its advance against the dollar amid heightened alert of Japanese intervention to halt the currency’s recent slide.
The Japanese currency gained 0.7% to 154.58 per dollar in early Sydney trading, extending Friday’s gain. Markets are on heightened alert of a Japan government intervention — possibly with rare US assistance — as Prime Minister Sanae Takaichi warned of action on abnormal moves.
The dollar is also in focus after the currency notched its worst week since May, fueling gains in global currencies after a week of unpredictable US policymaking that rattled financial markets. Elsewhere, equity-index futures pointed to losses for gauges in Japan and slight gains in Hong Kong and South Korea. Markets are closed in Australia and India.
Traders face a pivotal week as the Federal Reserve prepares to announce its policy decision and earnings disclosures from megacaps including Microsoft Corp and Tesla Inc. Equities have stabilised after a recent bout of volatility triggered by renewed US‑Europe tensions that rekindled tariff‑war concerns, while a sharp rise in Japanese bond yields unsettled global fixed‑income markets.
“Most efforts to support their currency will only cause long-term rates to rise further,” Matt Maley, chief market strategist at Miller Tabak, wrote in a note. “Thus, they seem to be between a rock and hard place right now.”
The yen’s jump in the US session on Friday came as traders reported that the Federal Reserve Bank of New York had called financial institutions to ask about the yen’s exchange rate. Wall Street saw it as an indication that the bank was preparing to assist Japanese officials to intervene directly in the currency market to prop up the yen.
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Equity investors also see reasons to be on guard as sentiment remains fragile in the run-up to the Feb. 8 elections. From the start of the year, Japanese stocks surged on bets that Takaichi would cement power through a snap election and then ramp up spending. Then, last Tuesday, the so-called Takaichi trade unraveled.
In geopolitical news, President Donald Trump threatened Canada with 100% tariffs against all its exports to the US if it made a trade deal with China, escalating tensions between Washington and its northern neighbor.
The key risk event for later this week will be the rate decision by the Fed. The US central bank is widely expected to keep rates unchanged on Wednesday even as Trump calls for lower borrowing costs.
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Bond investors will also turn their focus to leadership change at the central bank after Trump said last week he will soon reveal a successor to Chair Jerome Powell.
The commodities market will also be in focus this week after silver topped US$100 an ounce for the first time, extending a scorching rally built on surging demand for haven assets and frenzied buying in retail markets from Shanghai to New York.
Spot silver surged 7.2% to US$103.19 an ounce on Friday, bringing gains this year to 44% after prices more than doubled in 2025. Gold also climbed to a fresh record, edging closer to US$5,000 an ounce.
Uploaded by Isabelle Francis
