There’s really no better way to explain or describe what’s going on with the USD-JPY than with a blow-by-blow of what has happened since the FX market opened on Sunday.
- 22:40 EST (Sunday): USD-JPY spikes above the 160 mark.
- 23:00 EST (Sunday): While Japan took a breather with a public holiday, the Yen didn’t get the memo and nosedived. The Bank of Japan (BoJ) chose to focus on Japanese government bonds (JGBs) rather than salvaging the Yen. Eyes were on the Ministry of Finance (MoF), potentially cueing up the BoJ for intervention due to the significant interest rate differential with the USD.
- 23:34 EST (Sunday): As the USD-JPY punched through 160, major currencies elsewhere found their footing. The combination of short covering, option triggers, and a market thinned by the Japanese holiday created a perfect storm for the Yen’s decline.
- USD-JPY peaked briefly at 160.21 but then retreated.
- No official comment on potential intervention from Japan’s financial authorities despite significant movements.
- 01:00 EST: The pair dipped to 158.00, and it’s not known if this was an unannounced intervention by Japan.
- 01:15 EST: USD-JPY tumbles to 157.21. This steeper decline stirred talks of a BoJ intervention. With Tokyo potentially stepping in, it slid further to 156.85.
- 02:20 EST: Japan’s top currency diplomat played coy and offered no official comments on intervention, to no one’s surprise.
- 03:30 EST: Despite suspicions of intervention, USD-JPY managed to cling to a bullish bias, holding near 157.00 after dipping to 155.05.
- 08:25 EST: Reports hinted at a possible intervention, but nothing confirmed.
- 11:30 EST: USD-JPY is sitting at 156.66, and there are no new comments from Tokyo.
Today’s 570 pip swing is the biggest since December 2022. Additionally, the current daily high of 160.21 is a new 39-year high. What worries many macro FX traders is this: if the Yen is still weak despite intervention, how much weaker could it get? Only time will tell.
