USD/JPY 1 hour
Credit Agricole notes that recent interventions by the Japanese Ministry of Finance and the Bank of Japan have succeeded in creating asymmetric risks around the USD/JPY exchange rate. Estimated expenditures approaching those of previous interventions in 2022 have effectively influenced market expectations and risk assessments.
the main points:
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Intervention estimates: Preliminary data suggests that the Bank of Japan may have spent nearly US$55 billion on interventions to support the yen, with significant purchases occurring on select days last week.
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Comparison with previous interventions: This intervention level is close to the US$60 billion spent during the last major intervention efforts in September and October 2022, which resulted in a significant depreciation of the US dollar against the Japanese yen.
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Market impact: The actions taken by the Ministry of Finance and the Bank of Japan have likely put a temporary cap on the USD/JPY pair, preventing traders from pushing the pair significantly higher. This effect is complemented by the recent dovish signals from the Federal Reserve, which limits expectations for the US dollar to rise quickly.
Conclusion:
Concerted efforts by Japanese financial authorities appear to have dampened the bullish momentum of USD/JPY, creating a cautious trading environment. Investors may be reluctant to challenge these levels soon, given the aggressive stance of the Treasury Department and supportive rhetoric from the Federal Reserve.
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