USD/JPY: A new line in the sand for intervention at 165 – ING

Japan’s verbal interventions are ineffective. Periods of quiet volatility may continue to push USD/JPY higher, with a new line in the sand for intervention now close to 165, ING’s FX analyst Francesco Pesole notes.

BoJ verbal interventions bare no effect

“Observing the Yen’s most recent demise, it is clear that Japan’s verbal interventions are ineffective. Despite some softer US data, speculative selling pressure on the Yen remains elevated.”

“Periods of quiet volatility may continue to push USD/JPY higher, with a new line in the sand for intervention now close to 165, in our view. Crucially, large FX sales in 2Q proved to be only a temporary solution, meaning more pressure on the BoJ to hike.”

“Markets are pricing in 6bp for the 31 July Bank of Japan meeting. We are more hawkish, narrowly favouring a 15bp July hike and another move by year-end. The BoJ can help the Yen, although our bearish USD/JPY profile primarily relies on Fed cuts.”