USD/JPY Tumbles Amid Intervention, Eyes on Central Banks
The USD/JPY pair has seen significant fluctuations in recent days following a coordinated intervention by Japan and the US to defend the yen.
After weakening to a four-decade low near ¥164, the yen was pulled back sharply after the joint effort, with Tokyo reportedly spending around $34 billion in a single session to defend its currency.
The intervention briefly pushed the pair toward ¥155, but the yen has since given back some of those gains and is now trading near ¥158 as doubts persist over how long this intervention alone can hold.
The underlying driver of the USD/JPY's volatility remains the wide gap between US and Japanese interest rates, exacerbated by rebounding oil prices following renewed tensions in the Strait of Hormuz.
Markets are now watching for a possible BoJ hike in September, encouraged by six straight months of rising real wages, while the Fed’s own July dissents, three policymakers pushed for a hike over a hold, keep US rates firmly in the driver's seat too.