US Dollar Steadies Amid Fed Reluctance and Japanese Intervention

The US dollar has held steady after the Federal Reserve's reluctance to take action despite pledges to respect the inflation target, which has not been met in over five years.

The dollar was under pressure due to this lack of action. However, it appears that Japanese officials may have intervened in the foreign exchange market yesterday, and as was the case earlier this year, the Federal Reserve reported checking on prices and indicated they were doing so at the request of the US Treasury.

This intervention, if true, illustrates a notable difference between Japan, which tries to overwhelm the market with size (intervention and the BOJ's balance sheet expansion), while the US tries finesse. The MOF's decision to intervene, and a preliminary review of the BOJ's balance sheet suggests intervention involved selling almost $53 bln was not matched by the BOJ itself, which not only did not raise interest rates but shaved this year's core inflation projection.