The Japanese Yen (JPY) has rebounded modestly overnight following yesterday’s sharp sell-off. It has resulted in USD/JPY falling back closer to the 152.00-level after hitting an intra-day high yesterday of 153.19, MUFG’s FX analyst Lee Hardman notes.
“So far this month USD/JPY has risen by just over 6% which is the strongest equivalent period of gains since back in late August/early September 2022. It was then quickly followed by intervention by Japan to support the JPY in September and October 2022. In light of recent price action there is building speculation over the possibility of another of bout of intervention from Japan although it appears unlikely ahead of the US election given a Trump victory and Red Sweep could trigger another leg higher for USD/JPY.”
“Market speculation over further intervention from Japan was encouraged overnight by comments from Finance Minister Kato who stated ‘we are seeing one-sided, rapid moves’ in the foreign exchange markets, and emphasized that ‘we will closely monitor the foreign exchange market with a stronger sense of urgency, including watching for speculative trading’.”
“The comments have helped to provide some temporary support for the JPY overnight but the gains are likely to prove short-lived if US yields and the US dollar continue to adjust higher ahead of the US election in anticipation of Trump victory and Red Sweep.”
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