USD/JPY Intervention Expectations Fuel Yen Strength

Societe Generale's Kit Juckes notes that the Japanese Yen has been the strongest G10 currency this month, and market anticipation of further USD/JPY intervention is driving reluctance to be short on the Yen. As a result, EUR/JPY is likely to be sold on any rally today.

Juckes highlights that strong expectations for intervention are behind the recent Yen strength. He also cautions that another spike in oil prices could quickly reverse recent improvements in risk sentiment, keeping overall caution warranted.

The current market perception of further USD/JPY intervention has led to a strong GBP, JPY, and AUD, with GBP being stronger after its GDP data release. The Yen's outperformance is a result of the market's reluctance to be caught out by intervention.