USD/JPY Reclaims 159 as $88 Billion Intervention Fades

A recent $88 billion yen intervention by Japan and the US has had limited impact on the currency, with USD/JPY reclaiming 159 after a brief drop.

The joint effort included Japan buying nearly $53 billion in yen on July 30-31, followed by a second round of purchases adding around $34 billion. The US sold euros for yen through the New York Fed, but spent only $5-10 billion, compared to $833 million in 1998.

The intervention drove USD/JPY down from 164 to 157.3, but the pair has since recovered about a quarter of that loss. Japanese investors continued buying foreign bonds at a strong pace in July, according to Goldman Sachs, suggesting limited appetite for domestic assets.

The BOJ's September rate decision is now seen as the key catalyst for the yen and Bitcoin. A September hike could narrow the rate gap with the US, but would also push JGB yields higher, increasing paper losses on Japanese balance sheets.