Japanese Yen: Intervention slows but does not reverse trend – ING
ING’s Chris Turner describes USD/JPY’s rollercoaster, with a 3% drop on reported Japanese intervention followed by a near 2% rebound. He notes that coordinated Fed-Treasury involvement was key in January but now sees the story as having moved on.
Japanese Yen intervention has slowed the recent decline in USD/JPY, but it has not reversed the overall trend, according to ING analysts. The currency pair experienced a 3% drop following reported Japanese intervention, only to rebound near 2% overnight. Japanese authorities indeed intervened yesterday, and the Federal Reserve also checked rates on behalf of the US Treasury yesterday afternoon.
In January, the Fed's coordinated intervention alongside the US Treasury reflected shared concerns over the weak yen. However, the situation has evolved, and US authorities would need to take independent action to push USD/JPY lower again. More Japanese FX intervention may occur in the coming days and weeks, but until there is clearer evidence that the Federal Reserve will not raise interest rates in September and the broader dollar trend turns downward, intervention will only serve to slow, not reverse, the underlying USD/JPY bull trend.
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