Tokyo and Washington Unite Against Weak Yen as Intervention Risk Rises

The Japanese yen's weakness has become a shared concern between Tokyo and Washington, following a summit between US President Donald Trump and Japanese Prime Minister Sanae Takaichi.

Finance Minister Satsuki Katayama said Trump raised concerns about the yen's weakness during their meeting. In response, Takaichi told Trump that an undervalued yen is problematic as a general principle.

Katayama added that Tokyo will coordinate closely with Washington on currency matters and that the Bank of Japan's latest rate hike was aimed at achieving its inflation target.

The comments from Katayama suggest that joint or US-backed action to intervene in the yen's weakness is more likely, which could impact USD/JPY traders. The rate gap still favors the dollar, but the interest rate differential continues to be a key factor.