Japanese Yen: Policy focus after intervention - MUFG

MUFG’s Teppei Ino reviews recent USD/JPY price action following coordinated Japan-US intervention. The pair opened near 157.58, dropped toward 155.20 on official confirmation of joint action, then recovered and traded above 158 by 7 August. Authorities in Japan and the US signaled readiness to intervene again, while comments from Fed Chair Kevin Warsh supported expectations for a possible September rate hike.

USD/JPY stabilizes after sharp swings

"The USD/JPY opened the week at 157.58. The pair fell sharply early in Tokyo trading on 3 August after the MOF released a statement from Finance Minister Satsuki Katayama confirming coordinated intervention by Japanese and US authorities, sinking to a low of 155.20 following subsequent comments from Katayama and Vice Minister of Finance for International Affairs Atsushi Mimura."

"The USD/JPY gradually recovered after the initial decline and approached 158 on 4 August. Gains were capped for a time as both Japan and the US indicated that they remained prepared to intervene again."

"During US trading on 6 August, the pair moved above 158 and then rose to around 158.50 following reports that Fed Chair Kevin Warsh could consider a September rate hike depending on upcoming inflation data, among other factors."

"The pair was trading above 158 at the time of writing on 7 August. The dollar's decline following last week's FOMC meeting and the subsequent coordinated Japan-US intervention paused this week."

"Moves among the major currencies were generally limited to within 1% in either direction."