Yen steadies at 160.00 following Tokyo's warning as Japan's growth data approach

• At 160.00 for the first time since early September, USD/JPY loses momentum.
• US 10-year yields climb above 5% while Tokyo warns that the yen is moving too quickly.
• Friday brings US producer price data, ahead of Japan's growth release on Sunday.

At 160.00, the level at which Japan has bought yen twice this year, USD/JPY met resistance on Thursday after reaching it for the first time since early September. Having peaked marginally above that threshold, the pair is now trading just below it, virtually unchanged from its opening level. The last sizeable move came on Wednesday, when it broke out of its trading range.

Recent currency moves have been too rapid, Japan's Vice Finance Minister for International Affairs Mimura said on Thursday, warning that the summer's intervention should not be forgotten. Between 30 July and 3 August, Japan spent a record JPY 15.4 trillion. On Thursday, the New York Fed confirmed that the US Treasury had purchased yen during the third quarter. Although that operation pushed the pair down from around 164.00 to roughly 155.00, it has since returned to within about four yen of its starting point.

Following weak demand at a 30-year auction, the 10-year Treasury yield climbed to around 5.12% on Thursday, with a Fed rate increase on 9 December fully priced in. The dollar strengthened against the euro, the pound and the Kiwi, yet USD/JPY remained unchanged. The Bank of Japan (BoJ) rate stands at 1.25%, compared with the Fed's 3.75%-4.00%.

US prices and Japanese data lead the calendar

A speech by New York Fed President Williams is scheduled for 23:30 GMT on Thursday. Attention then turns to Friday's US producer price figures at 13:30 GMT: a monthly increase of 0.4% is forecast, following 1.3%. The release has implications for the size of the Fed's December rate rise.

Growth of 0.1% quarter on quarter, following 0.4%, is forecast for Japan's preliminary third-quarter Gross Domestic Product (GDP), due at 23:50 GMT on Sunday. At 04:00 GMT on Monday, BoJ board member Takata will speak, having voted for a rate rise on 30 October. October's national inflation figures are then due at 23:30 GMT on Thursday, 19 November. These three events all precede the BoJ's 18 December decision, at which a rate increase is widely anticipated.

USD/JPY breaks its range but pauses near 160.00

The 157.00-159.00 range had contained USD/JPY since late September until Wednesday's advance carried it higher. Around three-fifths of the decline from the late-July peak to September's low near 153.00 has now been retraced. By contrast, Thursday's trading bar is narrow: the low is a little below 159.50, while the opening and latest prices are virtually the same.

Daily USD/JPY chart