USD/JPY Intervention Falls Flat as Yen Headwinds Remain

The coordinated intervention between the US and Japan has had little impact on the yen's value.

Despite the recent intervention, the fundamental backdrop that drove USD/JPY higher remains unchanged.

Japan continues to run loose monetary policy settings, with interest rates below those elsewhere and real rates still negative.

The Bank of Japan (BOJ) missed an opportunity to signal a shift towards normalizing policy, instead producing another cautious performance.

The weak 10-year Japanese government bond (JGB) auction reinforced the message that investors demand higher yields to own JGBs.

Fiscal policy isn't helping the yen's cause either, with government debt already enormous and leaving Japan vulnerable to external shocks.