USDJPY Collapsing Amidst Suspected BOJ Intervention
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JPY Surges Again
USDJPY is on watch today as the pair sees a second day of heavy selling taking price down almost 2.5% from the week’s highs. The move comes amidst a softening in USD over the last 24 hours following some weaker data yesterday and dovish comments from Fed’s Williams. However, the scale of these moves in the Yen vs what we’re seeing elsewhere in the FX space suggests that some intervention has occurred, perhaps aimed at capitalising on USD weakness ahead of tomorrow’s keenly anticipated US jobs data.
Hawkish BOJ Chatter
Market chatter suggests that move is linked to a suspected rate check by the BOJ. Reuters and other news wires have cited sources reporting that officials contacted regional banks to check FX rates, signalling the likelihood of intervention. At the same time, JPY bullishness has been bolstered by comments from BOJ’s Takata who noted the possibility of the bank using outsized rate-hikes as a way of controlling inflation which has been on the rise again in Japan. BOJ governor Ueda also made some interesting comments noting that policymakers should be cautious of upside price risks when managing monetary policy. Together, these comments have boosted expectations of a fresh BOJ hike when the bank meets this month.
Technical Views
USDJPY
The recovery move in USDJPY has seemingly failed into the 160.49 level and retest of the broken bull trend line. Price is now back below the 157.85 level and with momentum studies heavily lower focus is on a test of the 154.65 level next and a resumption of the bearish channel break from earlier in August.
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