Japan's yen jumps, traders alert to intervention risk

The yen jumped suddenly against the dollar on Thursday, with traders alert to the prospect of intervention from Japan to prop up its stubbornly weak currency.

The dollar fell by as much as 0.9% to 161.115 yen JPY= and was last trading at 161.85, down 0.45%.

It was not immediately clear what drove the market move or whether Japanese authorities were in the market. It appeared smaller than that after previous bouts of intervention.

"I think it (dollar/yen move) is jittery price action," Derek Halpenny, head of research for global markets EMEA at MUFG in London.

"We have payrolls and a holiday, liquidity conditions will be thin, so markets are nervous about potential intervention," he said, referring to key U.S. jobs data due later on Thursday before a U.S. public holiday on Friday.

Sources told Reuters Japanese officials are abandoning their habit of telegraphing intervention risks, instead signaling a more targeted campaign to squeeze speculators and raise the cost of betting against the battered yen.

Officials are also avoiding any suggestion of a specific "line in the sand" exchange-rate level that would trigger action.

The yen crossed the 162 per dollar level on June 30 to its weakest in 40 years, pressured by Japan's relatively low interest rates.

It received little help from a well-telegraphed Bank of Japan rate hikeand an interim ceasefire between the U.S. and Iran, and no lasting boost from more than $70 billion in dollar-selling intervention in April and May.

The yen has unwound all of its gains since Japan last intervened, pressured by persistent dollar strength and growing expectations of a Federal Reserve rate hike this year, while the BOJ is expected to maintain its gradual approach to policy tightening.

-Reporting by Rae Wee and Harry Robertson, editing by Alun John and Dhara Ranasinghe/Reuters