USD/JPY Falls After US-Japan Intervention, Interest Rate Hike Looms

The US and Japan have jointly intervened in the foreign exchange market to support the yen, which had fallen to near 40-year lows. The coordinated effort saw USD/JPY fall from near ¥164 to as low as ¥155.20 before settling back around ¥157.

Japan's central bank data suggest Tokyo may have spent up to $36.58 billion buying yen on the day of the intervention, with the US Treasury reportedly selling euros to buy yen.

The joint intervention is a rare occurrence, with the last instance being in 2011 when authorities acted to weaken the yen after the Tohoku earthquake and tsunami.

The move has put pressure on heavily short-yen positions and raised expectations that the Bank of Japan could lift interest rates again as soon as its 17-18 September meeting.