Yen leaps after intervention, leaving the dollar bruised

The Japanese yen experienced a significant surge of 1% in Asian trade on Monday, reaching an intraday high of 156.01 per US dollar. This surge followed a more than 3% increase over two trading sessions last week. Japan's finance ministry confirmed joint yen-buying intervention on Friday, with the Bank of Japan data indicating Japan may have bought up to US$58.97 billion worth of yen on Thursday.

Analysts suggest that joint foreign exchange intervention is effective, with successful coordinated US interventions in the past. The yen has been under pressure for years due to the Bank of Japan's gradual approach to monetary policy tightening, which has maintained yield differentials between Japan and other nations. Experts believe that encouraging repatriation would be the most efficient policy for influencing the currency in the long term.

The yen's rise pressured the dollar, with the euro reaching a 1-1/2-month high of US$1.1559 early in Asia and sterling nearing a two-week top at US$1.3484. The dollar index remained stable at 99.78, down over 1.5% last week. Oil prices' decline also negatively impacted the greenback, following President Trump's cancellation of an attack on Iran and the announcement that talks between the two sides would take place on Monday.

Investor attention this week will primarily be directed towards Friday's US nonfarm payrolls data, which could provide insights into the labor market's health and potential impacts on Federal Reserve policy.