|

Japanese Yen: US trade focus shapes intervention – Societe Generale

Societe Generale’s Kit Juckes, drawing on Scott Bessent’s perspective, argues that recent coordinated US-Japan action in the Japanese Yen is part of a broader US trade strategy. While Japan seeks to stabilise the Yen and contain import prices, the US is focused on limiting Dollar appreciation versus key Asian trade partners, whose currencies have significantly weakened in real terms.

Yen support tied to wider US goals

"The current focus on the Japanese yen and the coordinated intervention by the US and Japan to support it this week, is understandable."

"History suggests that a single round of intervention is unlikely to be sufficient to turn the trend around, and the FX market is on high alert for the next move."

"But while for Japan, this is all about stabilising the yen, the US has a bigger picture in mind."

"There is a case for seeing the US support for Japan therefore, as a way for the US to try and (at least) prevent further dollar appreciation relative to the region and possibly, to turn the trend around Japan, China and South Korea together, account for around 18% of US trade, compared to around 16% for the Eurozone."

"The choice of starting point may be arbitrary, but the point remains – for the US, supporting the yen is about keeping the dollar down against one of the members of its biggest groupings of trade partners, whereas for the Japanese, it’s about not letting the yen continue to weaken against the dollar and push import prices up too fast."

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

Author

FXStreet Insights Team

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.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD consolidates near 0.7000 as USD stays weak

AUD/USD holds steady above 0.7000 during Thursday’s Asian session, consolidating the previous day’s recovery gains from a near three-week low as the Democratic sweep in the US midterm elections and Iran diplomacy hopes continue to weigh on the US Dollar. Bulls, however, seem hesitant as focus shifts to Friday’s crucial US NFP report.

USD/JPY drifts lower to 158.25 on hawkish BoJ Minutes, weak USD

USD/JPY trades with a negative bias for the second straight day on Thursday as hawkish BoJ Minutes, showing members agreed to keep raising rates, and intervention risks support the Japanese Yen. Meanwhile, US midterm election results and hopes for Iran diplomacy keep the US Dollar depressed as focus shifts to Friday’s US NFP report.

Gold hits one-week top near $4,080 on sliding US bond yields and weak USD

Gold builds on the previous day’s blowout rally, climbing to $4,080 during the Asian session on Thursday as falling US bond yields keep the US Dollar depressed near a one-month low, touched in reaction to Democrats’ victories in the US midterm elections. However, December Fed hike bets might cap the non-yielding bullion ahead of Friday’s US NFP report. 

Circle reserve income falls 8% as ARC presale lifts Q3 revenue
Circle (CRCL) reported increased revenue in its Q3 earnings update on Wednesday as the $182 million ARC token presale offset the decline in reserve income. The stablecoin issuer stated that total revenue and reserve income reached $865 million in Q3, up 17% from a year earlier. Net income from continuing operations increased 5% to $226 million, while adjusted EBITDA climbed 85% to $317 million.
US midterms 2026: Investor Q&A on the Democratic sweep
1. Gridlock replaces the stimulus narrative. A Democratic Congress would constrain Trump's ability to pursue additional fiscal expansion and legislative tax measures. But it cannot simply reverse the president's entire economic agenda. Executive powers, existing legislation and presidential vetoes remain important. 2. AI faces a higher hurdle, not an extinction event.
US Dollar breaks below 101.50 as Democrats sweep Congress
The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.