USD/JPY Slides Again: Is Another Intervention Looming?
The recent sharp moves in the Japanese Yen have left traders wondering if another round of intervention is on the horizon. A near 1% drop in USD/JPY within minutes, followed by another slide, sparked talk of renewed Japanese intervention after the Bank of Japan's earlier $96 billion sales.
Chris Turner at ING notes that a likely Fed hike in mid-September should keep USD/JPY supported unless the Bank of Japan turns much more hawkish. The sharp Yen moves have caught traders off guard, and some are questioning whether the recent price action is sufficient to satisfy authorities.
According to TMGM, US and Japanese authorities appear satisfied with yesterday's price action, but a sustained turn lower in USD/JPY now probably requires a much more hawkish Bank of Japan and new initiatives to encourage domestic investment in Japan.