US Funds Yen Intervention with Euro Sell-Off to Protect Treasury Markets

The recent US intervention to bolster the yen may have far-reaching implications beyond Japan. Instead of selling dollars, as was done in previous interventions, Washington reportedly sold euros to fund the currency-buying operation. This move allowed the US to weaken the greenback against the euro without destabilizing the sensitive Treasury markets.

The decision not to dump large quantities of Treasurys is a significant concern for Washington, according to industry veterans. A unilateral intervention by Japan could have led to a massive sell-off in Treasurys, potentially harming the US economy.

The euro strengthened to 1.1558 against the greenback on Monday, reaching its strongest level in almost two months. Meanwhile, major companies such as Amazon, HSBC, and Saudi Aramco reported earnings that exceeded expectations.