The yen was little changed on Wednesday against the U.S. dollar, moving away from the closely watched 150-per dollar mark, after a short-lived surge in the previous session stoked speculation that Japanese authorities may have intervened to support the currency.
On the other hand, the dollar index, which tracks the greenback against six peers, was down 0.2% at 106.73, giving up some of its recent gains, after weaker-than-expected U.S. private payrolls based on the ADP National Employment Report. The index, however, remained within striking distance of a nearly 11-month high of 107.34 reached in the previous session.
The dollar did retrace some of its losses after U.S. factory orders gained 1.2% in August, compared with expectations of a 0.2% rise. That more than offset the moderate decline in a U.S. services sector index last month.
The Japanese currency was last flat at 149.06 per dollar, after unexpectedly surging nearly 2% at one point on Tuesday to 147.30, its strongest level in three weeks. The spike came after it slipped to 150.165 per dollar, its weakest since October 2022.
"Dollar/yen is now trading pretty close to levels we saw just three sessions ago, which tells me that yesterday's move was not, in fact, an intervention on the currency pair," said Helen Given, FX trader, at Monex USA in Washington.
"I see an overwrought market reaction to touching that psychological 150 figure. Investors want so badly to believe that Japanese officials are intervening that they're repricing even before it actually happens," she added.
Japan's top currency diplomat, Masato Kanda, said he would not comment on whether Tokyo intervened in the exchange rate market overnight, although he said that "we have only taken steps that have the understanding of U.S. authorities".
The Bank of Japan's money market data showed on Wednesday that Japan likely did not intervene in the currency market a day earlier.
Analysts were divided on the issue, however. "Them stepping in here would be perfectly consistent with recent warnings from top officials and past behaviour," said James Malcolm, head of FX strategy at UBS.
Japanese authorities last year intervened to prop up the yen for the first time since 1998.
The currency has slumped around 14% against the dollar this year as U.S. bond yields have risen sharply compared to their Japanese peers as the Federal Reserve has hiked interest rates.
Dollar power
The dollar slipped after rising 0.85% over the previous two days, boosted by upbeat data on Tuesday showing U.S. job openings unexpectedly increased in August.
The euro rose 0.2% to $1.0486. But it did not stray far from Tuesday's low of $1.0448, its weakest level since December, triggering talk of a fall back to $1.
Europe's common currency euro rose even as data showed euro zone retail sales fell much more than expected in August and that the bloc's economy probably shrank last quarter.
The greenback has rallied around 3.5% over the last three months, boosted by a sharp rise in U.S. bond yields as growth has stayed strong and the Fed looks set to keep interest rates high for longer than previously expected.
"Dollar bulls are still winning the very young month," said Monex's Given. "Over the last few months, ADP (private payrolls report) has been wildly inaccurate compared to non-farm payrolls, so I see the U.S. dollar recovering this morning's negative swing through today and tomorrow's trading sessions."
Sterling climbed 0.3% to $1.2112, rebounding after falling to a nearly seven-month low of $1.20535 in the previous session.
Elsewhere, the New Zealand dollar fell after its central bank held the cash rate steady at 5.5%, as policymakers grew more confident that past hikes were working to bring down inflation as desired.
The decision sent the kiwi sliding more than 0.2% to a nearly one-month low of US$0.5871. But it last traded at US$0.5901, 0.3% on the day.