Yen Falls On Japan Fin Min Comments
Intervention Risks Back in Focus
The Japanese Yen is rallying today with USDJPY down around 0.5% in early European trading. The move comes amidst renewed intervention risks on the back of the recent push higher in USDJPY. This morning, Japanese fin min Katayama signalled that FX intervention remains a possibility and referred to a joint statement signed with the US last year which included options for joint intervention. Such a move would be unprecedented and could help significantly alter the USDJPY rate where the BOJ gas typically struggled to achieve a sustained reaction in response to prior intervention events. Given the reaction we’re seeing in JPY today there is clearly some caution among traders that intervention is coming.
Hawkish BOJ Expectations
These comments came alongside a report from Reuters this week signalling that sentiment within the BOJ is more hawkish than markets currently perceive. Political developments in Japan have exacerbated JPY weakness recently. PM Takaichi is preparing to dissolve the lower house and hold a snap election. If the fiscally dovish PM succeeds in gaining more seats for the LDP this could put greater pressure on JPY raising intervention risks further near-term. Focus now turns to next week’s BOJ meeting where hawkish risks are seen higher now.
Technical Views
USDJPY
The pair is currently retesting the broken bull channel highs and 158.12 level. While this area holds as support, focus is on a continued push higher with 160.23 the next bull target. If we slip below that area, however, focus turns to deeper support at 154.74 next.
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