Japanese Yen: Intervention doubts as flows favor US Dollar – BNY
BNY’s Wee Khoon Chong highlights that institutional investors bought Dollar and sold Japanese Yen after the June BoJ hike, and again following late-July joint intervention to weaken USD/JPY. Despite official action, real money treated the move as a USD/JPY buying opportunity.
Japanese Yen saw doubt regarding the effectiveness of central bank interventions as institutional investors continued to buy the US Dollar and sell Yen, according to BNY's Wee Khoon Chong. Following the Bank of Japan's June hike, institutional investors bought US Dollars and sold Japanese Yen, and this trend persisted after a joint intervention by the US and Japan to weaken USD/JPY in late July.
Chong questioned whether these interventions would have a long-lasting impact, as USD/JPY traded lower with elevated long-end Japanese government bond yields. The June 17 BoJ rate hike saw institutional investors pour into USD and sell JPY due to the hawkish interpretation of the new Fed Chair Kevin Warsh's first FOMC meeting. In July, a joint intervention aimed at weakening USD/JPY failed to deter institutional investors from buying the US Dollar and selling Yen, possibly indicating a perception of a USD/JPY buying opportunity.
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