Why Bonds Are at Center of US-Japan Intervention on Yen
The US is protecting its own bond market from spillovers by coordinating interventions with Japan, including liquidity mechanisms, explains State Street Investment Management Senior Fixed Income Strategist Masahiko Loo. He also explains why the next key level to watch is 155 yen per US dollar. (Source: Bloomberg)
The US and Japan have been coordinating interventions to support the yen. According to Bloomberg, this is partly to protect the US bond market from spillovers. State Street Investment Management's Masahiko Loo notes that the next key level to watch is 155 yen per US dollar.
Japan's Finance Minister Satsuki Katayama confirmed that Japanese authorities conducted a bilateral foreign exchange market intervention with the US on Friday to halt the yen's decline. The US Treasury Secretary also stated that Washington would participate in further coordinated action if disorderly moves in the yen persist.
The interventions have led to yen short-covering, which has put pressure on currency crosses such as AUD/JPY. The Bank of Japan maintained a hawkish bias at its July meeting, supporting the yen, while the Australian dollar struggles to attract buyers amid doubts about an immediate rate hike by the Reserve Bank of Australia.
Brief written by urgent.news from Bloomberg, FXStreet — 2 reports on this story. Machine-written — may contain errors; check the original before relying on it.
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