Currency war: markets pending the advance of the dollar and the weakness of the yen

The dollar rises today, recovering part of the losses derived from new estimates of interest rate cuts by the Federal Reserve this yearwhile the yen falls for the third consecutive day, keeping investors cautious with the expectation of a new intervention from Tokyo.

In Europe, Swedish krona came under pressure after central bank cut rates and said it expects two more cuts this year, as sterling stalled in negative territory ahead of Thursday’s Bank of England meeting.

For its part, The yen remained at the forefront of currency traders’ attentionweakening for the third consecutive day and prompting Japanese authorities to issue a stronger warning about the impact of currency weakness on the economy.

Traders believe Japanese authorities spent about $60 billion last week to shore up the yen after hitting a 34-year low against the dollar., around 160 units. Analysts believe that further intervention would only give the yen a temporary respite, given the wide difference in rates between the United States and Japan.

“If there was a sudden sharp rise in the dollar/yen, I would expect them to intervene in the market to support the yen. But if we continue to see a gradual move higher, I doubt they would intervene, although there is obviously a risk,” said Carol Kong , from the Commonwealth Bank of Australia.

The dollar gained 0.5% against the yenat 155.47 units, moving away from last week’s low of 151.86, reached after suspicions of intervention.

The dollar index, which compares the greenback with a basket of six major currencies, advanced 0.1%, to 105.48 units, above the one-month low reached last week.

The euro was stable at 1.0752 dollars and gained 0.2% against the Swedish crown, at 11.709 units. The pound was down 0.1% at $1.24995.