USD/JPY: A new line in the sand for intervention at 165 – ING

Japan’s
verbal
interventions
are
ineffective.
Periods
of
quiet
volatility
may
continue
to
push

USD/JPY
higher,
with
a
new
line
in
the
sand
for
intervention
now
close
to
165,
ING’s
FX
analyst
Francesco
Pesole
notes.

BoJ
verbal
interventions
bare
no
effect

“Observing
the
Yen’s
most
recent
demise,
it
is
clear
that
Japan’s
verbal
interventions
are
ineffective.
Despite
some
softer
US
data,
speculative
selling
pressure
on
the
Yen
remains
elevated.”

“Periods
of
quiet
volatility
may
continue
to
push
USD/JPY
higher,
with
a
new
line
in
the
sand
for
intervention
now
close
to
165,
in
our
view.
Crucially,
large
FX
sales
in
2Q
proved
to
be
only
a
temporary
solution,
meaning
more
pressure
on
the
BoJ
to
hike.”

“Markets
are
pricing
in
6bp
for
the
31
July
Bank
of
Japan
meeting.
We
are
more
hawkish,
narrowly
favouring
a
15bp
July
hike
and
another
move
by
year-end.
The

BoJ
can
help
the
Yen,
although
our
bearish
USD/JPY
profile
primarily
relies
on

Fed
cuts.”