Market on high alert for yen intervention after Takaichi warning

Core Viewpoint - Traders are on high alert for potential Japanese government intervention to stabilize the yen, with possible support from the US, as Prime Minister Sanae Takaichi indicated readiness to act against abnormal currency movements [1][4]. Group 1: Speculation of Intervention - Speculation regarding intervention has intensified after reports that the Federal Reserve Bank of New York contacted financial institutions about the yen's exchange rate [2]. - Michael Brown from Pepperstone Group noted that rate checks are often a precursor to intervention, suggesting the current administration has a lower tolerance for speculative foreign exchange moves compared to previous ones [3]. Group 2: Market Reactions - The yen experienced significant volatility, reversing a downward trend and gaining as much as 1.75% to 155.63 against the dollar, marking its largest one-day rally since August [3]. - Traders are advised to be cautious as the yen may trade near 155 against the dollar at the start of the week, following Takaichi's comments [5]. Group 3: Government Stance - Takaichi emphasized the government's commitment to address speculative and abnormal market movements, although she refrained from commenting on specific market conditions [4]. - Recent warnings from government officials have also included concerns about rising bond yields, which had reached record levels before retreating [5].