AUD/JPY Bounces above 110.50 as US and Japan Intervene

The AUD/JPY cross has bounced back above 110.50 after six days of losses, but its upside potential is limited by a joint intervention between the US and Japan to support the Japanese Yen.

According to Bank of America analyst Shusuke Yamada, 'the view that FX intervention cannot have a lasting impact and merely alters short-term market flows seems right in many cases.' However, Yamada notes that under specific circumstances, intervention can exert significant influence on the market and trigger an inflection.

The US and Japan have intervened to stabilize the Yen after its historic slide to its lowest level against the Dollar since 1986. The authorities made it clear they are ready to defend the currency if needed.