NEW YORK — The Japanese yen traded at 159.20 per dollar Tuesday, nearing the critical 160 level after weakening 0.9 percent Monday and extending its retreat from a three-month high of 155.20 reached last week.
The selloff follows a rare U.S.-Japan coordinated yen-buying intervention at the end of July. That action lifted the yen from a 40-year low of 163.99 per dollar, but the currency has since surrendered nearly half of those gains.
A decisive break above 160 would intensify intervention concerns, Masayuki Nakajima, senior fixed-income, currencies and commodities strategist at Mizuho, said.
Speculative traders have sharply reduced their bearish bets. Regulatory data show net short yen positions fell by $8.865 billion to $3.604 billion in the week ending Aug. 4, the largest single-week reduction in more than 12 years. Analysts expect speculators to rebuild those positions over time, though the prospect of faster Bank of Japan tightening remains a counteracting risk for yen bears.
Japan's Obon holiday period this week will thin market participation, raising the risk of sharp moves during low-liquidity trading hours.
The Reserve Bank of Australia held its cash rate at 4.35 percent, as widely expected, but its statement warned that further increases may be necessary. The RBA has raised rates by 75 basis points since February to combat persistent inflation driven by surging energy costs.
The Australian dollar was little changed at $0.7054 following the decision, holding near its strongest level since mid-June.
The U.S. dollar index stood broadly steady at 99.84 ahead of a week heavy with inflation data. Consumer price index figures are due Wednesday, producer price data Thursday and retail sales Friday.
Oil prices hovered near one-week highs as hopes for a resolution to the Middle East conflict faded, adding to global inflation concerns.
The euro traded at $1.1537 and sterling at $1.3499, both little changed on the day. China's yuan held near a three-and-a-half-year high against the dollar, with the offshore rate at 6.7484 and the onshore rate at 6.7468.
