The latest yen intervention effort is an out-of-the-ordinary move as Japan appears to be trying out a new strategy. It is relying on weaker US data to push the USD/JPY pair down in particular. Previous: Bank of Japan data suggests Japan also intervened in the foreign exchange market on July 12.
They intervened on Thursday following the US CPI report and did so again on Friday 30 minutes after the US PPI report. On the latter report, it looked like they waited a little while just to make sure the markets wouldn’t react against them as the PPI numbers were higher than expected.
Given the current circumstances, there is likely to be more uncertainty surrounding US retail sales data later today.
It’s not just a signal that will catch the attention of traders looking to price in Fed expectations. But it’s also a signal that could send USD/JPY lower on Japan, especially if the numbers come in below estimates.
A more dovish report would mean slower consumer activity and reinforce the narrative that the Fed will cut rates sooner. In turn, that would keep the dollar steady and officials in Tokyo may see it as another opportunity to intervene again.