Yen Surge: Fundamental Factors Drive Strength Over Intervention

The yen has surged in recent days, pushing USD/JPY back towards the 155.00-level, a crucial support level this year.

This strengthening appears to be driven by fundamental factors rather than intervention from Japan's central bank or government.

Recent data showed no signs of significant yen support measures from the Bank of Japan (BoJ), which instead has been tightening its policy under pressure from the US, with hawkish comments from officials and a Bloomberg report suggesting a 25bps rate hike this month.

The Japanese government's plans for increased spending also weighed on the yen, but yields on long-term JGBs have dropped, adding to speculation over a potential shift in the Government Pension Investment Fund's (GPIF) asset allocation towards domestic assets.