US-Japan Currency Alliance Sets Stage for Gold Revaluation

The US Treasury and Japan have formed an alliance to stabilize currency markets through coordinated purchases of yen. The move, led by US Treasury Secretary Bessent, aims to rescue US Treasuries by ceding dollar strength.

This shift in policy has significant implications for the global economy. Citi maintains a strong bullish outlook on gold, stating that its logic is more direct than other asset classes.

The alliance's core action involves joint intervention in the foreign exchange market to buy yen, with the US Treasury selling EUR/JPY as part of this effort. This has led to the creation of an informal 'currency union' between the two nations.