Intervention Coming?

Speculation over potential Japanese intervention in FX markets is helping underpin the Yen today. USDJPY is holding around the 145 level, a price point which has previously prompted intervention from Japanese authorities. Last September, the government and the BOJ acted in tandem to help influence FX rates for the first time in over two-decades.

Recently, we’ve heard from both government and BOJ members that authorities are monitoring FX markets and stand ready to act if JPY depreciation continues. With the BOJ holding monetary policy steady recently while the Fed has signalled a likely return to tightening at coming meetings, the divergence between market expectations towards the two central banks has acted as an upward driver for USDJPY.

Government Comments

Today, Japanese vice finance minister Masato Kanda told reporters that Japan is communicating with the US over a number of issues including currency and financial markets. These comments have stoked speculation regarding possible intervention in the Yen. However, with BOJ policy still on hold, any reaction in FX markets might prove short-lived with only a shift in BOJ policy likely to yield a sustainable impact.

Technical Views

USDJPY

The rally in USDJPY has seen the market trading up to a test of the 145 level where price is currently stalled. Given the bull trend and the local support sitting at 142.21, the focus remains on further upside for now. However, should price break back below that support level, 138. 03 and the channel lows are the next support zones to watch.