U.S. inflation data causes Japan's yen to increase, prompting traders to keep an eye on potential intervention.

• The yen was trading at approximately 158.55 against the U.S. dollar at 3 p.m. London time, down from its earlier high of 161.52.
• Since late 2022, the yen has experienced its largest daily increase, as reported by Reuters.

On Thursday, the market was jolted by fresh U.S. inflation data, causing the to lose around 2%.

The yen's biggest daily rise since late 2022 occurred at 3 p.m. London time when it traded at 158.55 against the U.S. dollar, after earlier trading nearer 161.52.

The yen strengthened as the U.S. recorded its lowest CPI reading in over three years. Some currency experts attributed the move to the U.S. data, with Kit Juckes, global head of foreign exchange strategy at Societe Generale, stating via email that the "driver of the yen rally is big shorts and a surprise in CPI."

Japanese authorities are considering intervening in the yen market to support its struggling currency, causing traders to remain vigilant.

Marc Ostwald, a global strategist and chief economist at ADM Investor Services, stated that there was no concrete evidence for intervention, but he believed that the broad dollar sell-off was triggered by stop loss triggers, particularly in JPY. He also expressed a strong suspicion that the Ministry of Finance may have used the opportunity to intervene modestly.

If an asset reaches a specified price, stop losses are market orders that activate.

The Ministry of Finance's vice-minister for international affairs, Masato Kanda, stated that he couldn't provide any information on potential intervention. A spokesperson for the ministry was not immediately reachable for comment.

In May 2022, Japan intervened in its currency market for the first time since 2022, spending $62 billion. The ministry revealed that Japan spent 9.7885 trillion yen ($62.25 billion) on currency intervention between April 26 and May 29.

The Japanese currency rebounded sharply in the weeks leading up to this timeline, with the yen plummeting to a 34-year-low of 160.03 against the U.S. dollar on April 29. Despite this, the yen later bounced to 156 levels in the same session, fueling speculation of potential intervention by Japanese authorities.

Since the Bank of Japan ended its negative interest rate policy in March, the yen has been facing sustained pressure.

Shunichi Suzuki, the Japanese Finance Minister, has supported the possibility of interventions if significant currency fluctuations affect households and businesses. However, he refused to provide any comment when asked if the ministry had taken action to support the yen at the time.

Japan intervened in the currency market in October 2022 to stabilize the yen, which had fallen to approximately 152 per dollar. The authorities intervened three times that year, spending a combined 9.2 trillion yen to stabilize the currency.

The updated version of this story now includes accurate historical data for U.S. CPI.