NEW YORK: The dollar slipped against the yen on Monday while weakening across a broad swathe of currencies, under continued pressure as the U.S. Federal Reserve has kept interest rate hike expectations low.
The greenback briefly gained against the yen, after hitting 17-month lows overnight as Japan warned it could intervene in the market to weaken the yen. But those gains did not last as momentum for the dollar/yen remained on the downside.
"The market is very reluctant to price in any Fed hike so that's keeping the dollar lower against the yen," said Vassili Serebriakov, currency strategist at BNP Paribas in New York. He sees the dollar testing the key 105 level versus the Japanese currency.
In late trading, the dollar was down 0.1 percent against the yen, at 107.97. Earlier the dollar fell to 107.64 yen, the lowest level since October 2014. The greenback has fallen three straight weeks against the Japanese currency.
The warning from Japan's chief cabinet secretary, Yoshihide Suga, on the yen's recent gains earlier spurred an unwinding of some one-sided trades on the dollar-yen before the pressure eased.
Suga said overnight that the Group of 20's agreement to avoid competitive devaluations did not mean Japan cannot intervene against currency moves, repeating language which has flagged intervention in the past.
"The market is not afraid of intervention at these levels," said BNP's Serebriakov. "Most people would look at 100 yen as the more realistic level in which Japan could intervene."
Any intervention by Japanese authorities would be about volatility, he added. "It's one thing if we move to 103 yen in two months. If we move to 103 in two days, that's a different story."
Suga told a news conference the Japanese government was closely monitoring the currency market with a sense of urgency, calling the yen moves one-sided and speculative.
The euro was little changed against the yen, at 123.14 yen , and was flat versus the dollar at $1.1405.
A number of Fed policymakers are scheduled to speak this week, but analysts held out little hope that their comments would significantly revive expectations for interest rate rises this year. The Fed's next policy meeting is on April 26-27.
Dallas Fed President Robert Kaplan on Monday said he does not support an interest rate hike based on the current crop of U.S. data.
In late trading, the dollar index was down 0.3 percent at 93.972.
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