USD/JPY Swings Wild as Stealth Interventions Spark Market Volatility

The US dollar weakened across the board yesterday following stealth interventions from Japan and South Korea. Month-end flows exacerbated the price action, resulting in wild swings in USD/JPY.

The focus remains on US-Iran developments and next week's US CPI report, which could decide whether the Fed hikes interest rates in September or not. Inflation risks remain skewed to the upside until a clear de-escalation is achieved.

Japan's currency appreciated massively following its stealth intervention, with some gains already erased as USD/JPY buyers took advantage of better prices. The trend is unlikely to change without a dovish repricing in Fed interest rate expectations or a faster BoJ tightening pace.