No sign of intervention, strategists say The U.S. dollar on Wednesday reversed a sharp loss and moved higher versus the Japanese yen, with strategists tying the move to yen profit-taking on fears that recent gains could invite intervention. Analysts said there were no signs of intervention by Japanese or other authorities. The dollar traded at 88.94 yen in recent action, up from 88.79 yen in late North American trade on Tuesday. The dollar had slipped toward the 88-yen level in earlier trade, notching its lowest level against the Japanese currency in eight months. The move came after Japan's finance minister told The Wall Street Journal that recent foreign-exchange moves didn't appear "extremely abnormal." But the pace of the move appeared to prompt some fears of at least verbal intervention, said Mike Malpede, chief market analyst at Easy-Forex in Chicago. Strategists at Brown Brothers Harriman said defense of an option also likely helped hold the dollar above the 88-yen level. Japanese Finance Minister Hirohisa Fujii told the Journal in an interview published Wednesday that government intervention was warranted in cases of "outrageously reckless movements," but he indicated that recent yen gains weren't outside the realm of acceptable market activity. "Looking at the current situation, I don't regard it as being extremely abnormal," he said. A strong yen has raised worries for Japanese exporters and the economy because it makes their products more expensive to foreign buyers while cutting into profits generated overseas. Earlier, Japanese investors and exporters were heavy sellers of the dollar/yen cross following the report, wrote strategists at BNP Paribas. Nomura's expected 433 billion yen ($4.9 billion) share sale is also a positive for the Japanese currency, they said. The British pound was lower, slipping to $1.5882 versus the dollar from $1.5929. The euro, meanwhile, lost ground to the dollar to trade at $1.4691, down from $1.4726 late Tuesday. The euro slipped after failing to extend early gains. The single currency posted little reaction to data showing second-quarter gross domestic product shrank by 0.2%. That was an unexpected downward revision from the statistics agency Eurostat's earlier estimate of 0.1% decline from the previous quarter. The euro jumped 1.2% versus the Swedish krona, however, with 1 euro fetching 10.349 Swedish units. The Latvian government is reportedly weighing measures that would limit the liability of mortgage borrowers to the value of their collateral rather than the entire loan amount. Such a move could cause serious pain to the Nordic banks that dominate the nation's banking sector, while also making it easier for Latvia to devalue its lat currency, economists said. See full story. Sweden, meanwhile, has upped pressure on Latvia to significantly cut its 2010 budget to meet the terms of the rescue package put together by Nordic countries, the International Monetary Fund and the European Union. Given the situation, "it would seem prudent to embrace the recent uptrend" in the euro versus the Swedish currency, wrote Neil Mellor, currency strategist at Bank of New York Mellon. The dollar index (DXY 76.47, +0.14, +0.18%) , a measure of the greenback against a trade-weighted basket of currencies, reversed earlier weakness to trade at 76.392, up from 76.261 Tuesday.

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