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.
Key Quotes
“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.”
