Yen Flows Hesitant to Challenge Authorities' Resolve

The Japanese Yen has seen significant flows in recent days, with USD/JPY continuing to decline as markets remain hesitant to challenge the resolve of Japanese and U.S. authorities.

According to Geoff Yu from BNY, the strong JPY flows observed on Tuesday are the strongest since mid-July, suggesting that heavy post-intervention selling has largely run its course.

The practical intervention ceiling for USD/JPY now appears to be around 160, making markets more reluctant to add fresh shorts and increasing the risk of renewed pre-intervention buying.

Yu remains skeptical that Japanese authorities can generate sustained JPY appreciation through intervention alone, citing a reflationary policy mix and higher inflation rates compared to the early Abenomics period.