Japanese yen touches 38-year low as global stocks finish mixed

Japanese officials have said they are ready to support the yen but it wasn't immediately clear if they had intervened after the currency hit a 38-year low against the dollar (Richard A. Brooks)
Japanese officials have said they are ready to support the yen but it wasn't immediately clear if they had intervened after the currency hit a 38-year low against the dollar (Richard A. Brooks)

The yen, weakened by the Japanese government's easy monetary policy, hit a 38-year low against the dollar on Wednesday, sparking speculation about a new intervention by authorities.

Stocks on Wall Street eked out small gains after a choppy session that saw big moves in some individual stocks after corporate earnings, while those elsewhere were mostly lower.

The yen slid as far as 160.75 against the greenback, before paring some of its losses.

Despite sliding through the 160 level, there was no indication that authorities had intervened to support the yen, said market analyst David Morrison at Trade Nation.

"This being the case, it's possible that traders work to push the yen lower in a renewed attempt to test the resolve of the Japanese authorities," he said.

The Asian country's top currency official has said authorities were ready to act 24 hours a day if the unit fell too far, but some investors have said they suspect the new trigger may be 165 yen to the dollar.

Billions were pumped in to support the yen after it hit a 34-year low of 160.17 in late April, but with limited effect.

"If the Japanese finance ministry sees FX (foreign exchange) intervention as a waste of money, then they may let the yen continue to weaken, and leave it up to the BOJ (Bank of Japan) at the end of July to boost the yen with monetary policy tightening," said XTB's Research Director Kathleen Brooks.

The euro also remained under pressure before weekend elections in France that polls suggest will see big wins for far-right and left-wing parties, pushing President Emmanuel Macron's pro-business centrists into third.

The Paris stock market finished the day down 0.7 percent. Eurozone peer Frankfurt fell 0.1 percent after a key survey showing German consumers are feeling more pessimistic heading into July, rattled by stubborn inflation and economic uncertainty.

- Preparing for inflation data -

On Wall Street, the Dow Jones Industrial Average rose less than 0.1 percent, while the broad-based S&P 500 gained 0.2 percent and the tech-rich Nasdaq Composite Index climbed 0.5 percent.

"It was not a heavy input day in terms of new news," said Art Hogan of B. Riley Wealth Management.

He said investors were looking forward to the release of Personal Consumption Expenditures (PCE) consumer spending data on Friday, which the Federal Reserve uses when weighing interest rate decisions.

The US central bank recently voted to hold its key lending rate at a 23-year high, and penciled in just one cut for this year amid sticky inflation in the first quarter of the year.

Among individual stocks, shipping giant FedEx surged 15.5 percent on Wednesday after reporting earnings that topped analysts' estimates following job cuts and other measures to cull expenses.

The electric vehicle manufacturer Rivian Automotive soared more than 23 percent after announcing that Volkswagen would invest up to $5 billion in the electric vehicle maker.

While some firms saw gains, others fell: General Mills slid 4.6 percent as it reported a six percent drop in quarterly sales while price inflation hits demand.

- Key figures around 2100 GMT -

New York - Dow: UP less than 0.1 percent at 39,127.80 points (close)

New York - S&P 500: UP 0.2 percent at 5,477.90 (close)

New York - Nasdaq: UP 0.5 percent at 17,805.16 (close)

London - FTSE 100: DOWN 0.3 percent at 8,225.33 (close)

Paris - CAC 40: DOWN 0.7 percent at 7,609.15 (close)

Frankfurt - DAX: DOWN 0.1 percent at 18,155.24 (close)

EURO STOXX 50: DOWN 0.4 percent at 4,915.94 (close)

Tokyo - Nikkei 225: UP 1.3 percent at 39,667.07 (close)

Hong Kong - Hang Seng Index: UP 0.1 percent at 18,089.93 (close)

Shanghai - Composite: UP 0.8 percent at 2,972.53 (close)

Dollar/yen: UP at 160.73 yen from 159.68 yen on Tuesday

Euro/dollar: DOWN at $1.0680 from $1.0715

Euro/pound: UP at 84.57 pence from 84.43 pence

Pound/dollar: DOWN at $1.2625 from $1.2686

Brent North Sea Crude: UP 0.3 percent at $85.25 per barrel

West Texas Intermediate: UP 0.1 percent at $80.90 per barrel