USD/JPY: Intervention talk caps gains – BNY

FXStreet Insights Team FXStreet

BNY’s Head of Markets Macro Strategy Bob Savage highlights that Japanese authorities are stepping up FX warnings as USD/JPY trades just below 160. Finance Minister Satsuki Katayama signalled readiness to act against volatility linked to Middle East tensions and higher Oil prices, while the weaker Japanese Yen is pushing 10-year JGB yields higher. The Bank of Japan is not expected to hike this month, keeping policy support in place.

Authorities signal readiness on currency

"Headlines that Japanese Finance Minister Satsuki Katayama is prepared to take all necessary steps on FX were sufficient to keep USD gains from breaking through the JPY 160 barrier. However, the painful effect of the weaker JPY on JGBs is notable, with 10y rates up 7.5bp to 2.24%."

"The BoJ is not expected to hike this month, but JPY weakness and oil shocks will risk more inflation."

"Japan’s Finance Minister Satsuki Katayama has said the authorities are prepared to take all necessary measures on FX under all circumstances, citing heightened volatility linked to developments in the Middle East and the impact of rising oil prices on households."

"She stated that large fluctuations are occurring across financial markets, including currency markets, and emphasized that the government is monitoring conditions closely."

"Katayama declined to comment on specific exchange rate levels and refrained from addressing whether FX intervention would be difficult given that recent yen weakness has been driven by higher oil prices."

(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.

GBP/USD: Downward-sloping trendline near 1.3470 remains key barrier

The British pound faces selling pressure against its major currency peers, trading 0.1% lower at around 1.3420 against the US Dollar during the European trading session on Tuesday.

Euro defends the 1.1500 level ahead of a string of US labour data

The Euro (EUR) posts marginal gains against the US Dollar (USD) on Tuesday as Monday’s reversal from three-week highs at 1.1560 has been contained at 1.1500 so far. A mild risk appetite on hopes of a negotiating process in Iran and investors’ cautiousness ahead of the release of key US labour indicators are providing some support to the pair on Tuesday.

Aave: Bearish RSI divergence risks a 20% drop despite steady DeFi deposits

Aave (AAVE) extends a mild near-term recovery on Tuesday, holding above its 50-day Exponential Moving Average at $90.80. Aave protocol’s V3 deployment on Monad blockchain recorded over $500 million in deposits over the last month, reflecting increased user adoption.

US JOLTs report in focus

In the US, the June JOLTs report will be in the spotlight. Job openings have increased modestly this year, which has historically predicted rising wage cost pressures ahead. June trade balance data will also be released in the afternoon and the preliminary reading pointed towards a stable trade deficit from May. The Fed's Schmid (non-voter, hawk) will be on the wires overnight.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.