Japanese Yen: Intervention jitters linger – ING
Chris Turner at ING notes that a near 1% drop in USD/JPY within minutes, followed by another slide, sparked talk of renewed Japanese intervention after the Bank of Japan’s earlier $96 billion sales.
The USD/JPY currency pair experienced a sharp decline over a short period, followed by another drop, prompting speculation about potential intervention by the Japanese government. This came after the Bank of Japan's earlier $96 billion sales in late July/early August. Traders were skeptical that the recent drop was due to intervention, as there was no significant disruption in the electronic trading systems at the time.
US and Japanese authorities, however, appeared satisfied with the price movement and wanted to encourage long positions on USD/JPY and EUR/JPY. A Fed hike in mid-September is expected to maintain the bid for USD/JPY, but a more hawkish Bank of Japan and new initiatives to boost domestic investment might be needed for a sustainable decline.
The pair dropped below 157.00 in European trading on Thursday due to a weak US ADP report and renewed selling pressure on the US Dollar. Meanwhile, hawkish Bank of Japan expectations and intervention risks continue to support the Japanese Yen, which is negatively impacting the major currencies.
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