Bank of Japan watch – MUFG says USD/JPY in the danger zone for intervention

MUFG is wary of Bank of Japan intervention in the yen, citing USD tailwinds (from the Federal Open Market Committee (FOMC) minutes specifically) and JGB yields.

  • The short-term bias remains favourable for the Dollar and the minutes and the data support that view.
  • The further strengthening of the Dollar has brought USD/JPY into the danger zone for intervention to halt the move higher. Resistance to a higher USD/JPY could at least involve allowing the 10-year JGB yield to drift further higher. You cannot fight a weaker Yen and higher yields in a credible manner.
  • From an intra-day low on 28th July, USD/JPY is 8 big figures higher so this move is of a scale that could justify action.

Since the note USD/JPY has dribbled a little lower, a stay of execution.

ps. JPY alert: The clear signals to watch for imminent Bank of Japan FX yen intervention

Mitsubishi UFJ Financial Group is the world’s second-largest bank holding company and second largest public company in Japan.

This article was written by Eamonn Sheridan at Source