Forex
Joint Yen Intervention Seen as Containment Exercise
The joint US-Japan intervention in the foreign exchange market has been seen as a containment exercise rather than a way to drive USD/JPY sustainably below 155.
ING Think notes that despite $70-80 billion worth of dollars being supplied to the market over the last three days, the broader dollar is holding up quite well.
The key factor driving this resilience is the unresolved issue of whether the Federal Reserve will hike interest rates in September. The market currently prices in a 16-17 basis point probability of a rate hike, which has bounced back from a low of less than 10 basis points last week.