Investors have fallen over each other in recent weeks to buy the yen on bets that interest rates are finally about to tip in Japan’s favor. They face a moment of truth as soon as Wednesday.
The currency has climbed roughly 5% against the dollar since it began surging on July 11, a move that was amplified by suspected market intervention from Japanese authorities. After vacillating between gains and losses in Tokyo and London trading Friday, the yen rallied as much as 0.5% in New York before paring the advance.
But some investors warn that the rally is fragile, as was on show this week when the yen rapidly retraced an advance after Thursday’s stronger-than-expected U.S. economic growth figures.