USDJPY 1 hour
Crédit Agricole suggests that recent interventions by the Japanese Ministry of Finance (MoF) and the Bank of Japan (BoJ) have succeeded in creating asymmetric risks around the USD/JPY exchange rate. Estimated spending close to that of previous interventions in 2022 has effectively influenced market expectations and risk assessments.
Key points:
Estimates of interventions: Preliminary data indicates the BoJ may have spent around $55 billion on interventions aimed at supporting the yen, with significant purchases taking place on specific days last week.
Comparison with previous interventions: This level of intervention is close to the USD 60 billion spent during the last major intervention effort in September and October 2022, which resulted in a notable depreciation of the USD/JPY.
Market impact: The actions of the Ministry of Finance and the BoJ have likely put a temporary cap on USD/JPY, dissuading traders from pushing the pair significantly higher. This effect is complemented by recent accommodative signals from the Federal Reserve, which dampen expectations of a rapid strengthening of the dollar.
Conclusion:
Concerted efforts from Japanese financial authorities appear to have tempered USD/JPY’s bullish momentum, establishing a cautious trading environment. Investors may be hesitant to challenge these levels anytime soon, given the Department of Finance’s aggressive stance and the Fed’s supportive rhetoric.
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