Japanese Yen: Intervention risk stays elevated – MUFG

FXStreet Insights Team FXStreet

MUFG’s Lee Hardman notes that the US Dollar’s (USD) rebound alongside higher Oil prices has lifted USD/JPY back towards 158.00, close to levels seen before suspected Japanese intervention. He highlights that authorities in Japan and the United States (US) are stressing close coordination on currency volatility, leaving the door open to further intervention while the Middle East conflict continues to weigh on markets.

Authorities keep intervention option open

"The rebound for the US dollar and the price of oil has helped to lift USD/JPY back up towards the 158.00-level overnight where the pair was trading prior to the last bout of suspected intervention from Japan on 6th May. It is making market participants nervous that Japan will step back in again soon to support the yen again."

"According to media reports Japan has spent around JPY10 trillion to support the yen, and further intervention will likely be required if the fundamentals factors that driven a weaker yen do not change soon. The Middle East conflict has triggered higher energy prices which have hurt Japan’s terms of trade, and yield spreads have moved against the yen recently as rate hikes have been priced in for other major central banks."

"After meeting with Finance Minister Katayama overnight, he posted “I am pleased to reaffirm the strong economic partnership between the US and Japan. The level of communication and coordination between our teams in addressing undesirable, excess volatility in currency markets continues to be constant and robust”. The comment indicates that the US remains supportive of Japanese intervention to support the yen."

"She believes that they have “full understanding” that intervention is among options for addressing excessive volatility in the foreign exchange market. It leaves the door open for further intervention to dampen yen weakness while the Middle East conflict remains unresolved."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?

The Euro is not the sick man of Europe. France's bond market is

EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.