LONDON - ​The Japanese yen struggled around four-decade ⁠lows on Monday, raising the risk of official intervention, while the dollar steadied after last week's soft jobs report lessened the ‌odds of an imminent interest rate hike.

The yen last traded around 162.3 per dollar, just above last week's low of 162.84, the weakest since 1986, leaving traders ​nervous after a sudden surge in buying briefly lifted the currency on Thursday.

The dollar found its feet after having posted its worst weekly performance since April last ​week, ​weighed down by a U.S. payrolls report that showed job growth slowed sharply in June, which, together with the weaker oil price, has curbed market expectations for a rate increase this month.

Investors are now looking ahead to the minutes of the Federal Open ⁠Market Committee's (FOMC) June meeting on Wednesday for clues about the rate outlook.

New Chair Kevin Warsh has given little away so far, other than to say last week that anyone thinking the Fed may go easy on inflation, which he acknowledged had cooled recently, could be "disappointed".

"But will the rest of the committee follow suit? Waller, for example, argued only a few months ago that you'd have to be 'crazy' to consider cutting rates. ​Will he provide another similarly ‌definitive signal? That's what ⁠traders should be watching for," ⁠City Index strategist David Scutt said, referring to Fed policymaker Christopher Waller, who Scutt said tended to be a "lead indicator for the direction of travel on ​the FOMC".

The dollar index, which tracks the performance of the U.S. currency against six peers, hit ‌a 13-month peak last week, but has since retreated as expectations for a July rate ⁠hike have faded.

"The risk-reward is no longer as one-sided as it was only a week ago," Scutt said.

"As such, for the first time in several months, I'm moving to a more neutral stance on (the dollar index). Respect what the price is telling you. Right now, it says the next move is no longer a one-way bet," he said.

 

YEN VIGIL

Meanwhile, the yen remained firmly in the spotlight, as the threat of official intervention kept traders on edge, even though analysts doubt any such move by Tokyo would deliver lasting support.

Moh Siong Sim, currency strategist at OCBC, said the market is still contending with hawkish Fed risk, which is a negative for the yen. However, concerns about potential intervention have stemmed further weakness in the currency.

"In the near term, I would expect the yen to remain under pressure," he said. Investors are ‌also concerned about Japanese officials abandoning their habit of telegraphing risks, instead signalling a ⁠more targeted campaign to squeeze speculators and raise the cost of betting against the yen.

Ben Bennett, head ​of investment strategy for Asia at L&G Asset Management, expects Japanese authorities to intervene if currency volatility increases, but said "the direction of travel is a function of easy domestic fiscal policy and the big interest-rate differential with the U.S."

"I don't think intervention will change that," he said.

The euro was at $1.142, down ​0.14%, but not ‌far off two-week highs, while sterling was down 0.1% at $1.334.

The South Korean won eased on its first ⁠day of 24-hour onshore spot trading, down 0.1% at 1,531 ​to the dollar.