JPY: Diverging Views Between the US and Japan on Intervention – MUFG
Lee Hardman, Currency Analyst at MUFG, notes that the yen has remained
on a firmer footing in the Asian trading session supported by more
risk-averse trading conditions in the near-term.
“The pick-up in Fed rate hike expectations is weighing modestly so far on risk assets with the stronger US dollar increasing downward pressure on emerging market and commodity-related currencies. Less favourable financial market conditions is acting as a dampener on the ability for USD/JPY to take part in the broad-based US dollar rebound. External conditions of weak global growth still remain supportive as well for the yen.
Japanese Finance Minister Aso made further comments overnight on the yen in front of parliament. He stated that it was natural each country has a different view on the FX market which is clearly evident by strong US opposition to Japan intervening in the current market environment. US Treasury Secretary Lew clearly highlighted that there is a high hurdle for the yen price action to be considered disorderly which would justify intervention. In contrast, Finance Minister Aso’s definition is less onerous. He stated overnight that FX moves of “5 yen over two days are considered one-way and lopsided”. As a report from Bloomberg highlighted that such price action has occurred a total of 51 times since the start of 2000.
Comments from Finance Aso have also dampened expectations ahead of the upcoming G7 leaders meeting. He stated that he’s not really expecting G7 leaders to build on the agreement at last week’s finance ministers and central banks governors agreement to boost demand through a mix of fiscal, monetary and structural measures. He noted that it is evident that there won’t be co-ordinated fiscal action.”