The Japanese yen returned to the center of market focus as traders weighed the possibility of a coordinated U.S.-Japan currency intervention - an event that would be the first of its kind in 15 years. Volatility that produced large intraday swings late last week settled into a more orderly appreciation on Monday, with the yen strengthening to 153.81 per U.S. dollar after trading as weak as 159.23 on Friday.
Market participants said on Friday that the New York Federal Reserve contacted traders to verify rates, a move often seen as a precursor to formal intervention. In the subsequent Asian trading hours, investors broadly sold the dollar amid apparent cooperation with U.S. authorities, contributing to the yen's rebound without a confirmed official intervention.
Observers noted that a sizeable move in the yen in the absence of an announced intervention highlights investor caution and relatively light positioning. Some traders appear to have been trimming short-yen positions to avoid being caught on the wrong side if authorities were to enter the market.
Japanese officials indicated on Monday that they have been closely coordinating with U.S. counterparts on foreign exchange matters. The yen's appreciation weighed on risk assets across the region - the stronger currency pressured the Nikkei, which slipped about 2% - and exerted downward pressure on the U.S. dollar while lifting some weaker Asian currencies, including the South Korean won.
Precious metals benefited from a dual boost of safe-haven demand amid rising geopolitical tensions and a softer dollar. Gold advanced past $5,000 per ounce for the first time and silver jumped more than 4% to another record high, reflecting strong inflows into the sector as currency moves rippled through markets.
Beyond currency markets, attention is turning to a Federal Reserve policy meeting later in the week. The Fed is widely expected to hold interest rates steady, yet market participants are closely monitoring concerns about the central bank's independence. President Donald Trump has repeatedly criticized Fed Chair Jerome Powell for not cutting rates more aggressively, and the Justice Department has threatened a criminal investigation into Powell linked to renovations at the Fed's new headquarters. Separately, the president's effort to remove Fed Governor Lisa Cook is scheduled for a Supreme Court hearing.
On the corporate front, investors will be watching Ryanair's earnings release, which comes amid a social media dispute between Elon Musk and Ryanair chief Michael O'Leary.
Key development to watch on Monday:
- Germany - lfo survey data for January
Note: Market commentary also referenced analyst tools and valuation resources for assessing specific equities, including ticker RYAAY, alongside promotional offers for research services.