Japan’s chief currency diplomat, Kanda, dropped all warnings before Tokyo went to sleep, but there was no intervention. It is now approaching 1am in Tokyo and the market feels that the situation is safe for at least a few hours.
I imagine there is some element of short covering here as those expecting a line in the sand at the 160.00 level expect to exit. However, two months ago the Ministry of Finance allowed the pair to move one way from 158.00 to 160.20 before pushing the pair down by 800 pips. They may be trying to attract spec longs again before they blow them out.
USD/JPY 10 minutes
I admire anyone who wants to do this dance with Japan but it’s a real game of chicken. Watch for the US 5-Year Auction at 1 PM ET. Yields are 6-7 basis points higher across the curve at the moment and are compressing. A weak/strong auction could have a negative impact on USD/JPY, although I do not expect more than 20 pips under any circumstances.