USD/JPY: Intervention fears steer Yen strength – Societe Generale

Kit Juckes at Societe Generale highlights Japanese Yen outperformance in G10 as markets anticipate further USD/JPY intervention. He argues that strong intervention expectations are driving reluctance to be short Yen, with EUR/JPY likely sold on rallies. However, he cautions that another spike in Oil prices could quickly reverse recent improvements in risk sentiment, keeping overall caution warranted.

Market wary of fresh action

"The main movers are GBP (stronger after the GDP data), JPY (as markets anticipate further intervention to support the currency), and AUD (weaker following the RBA meeting, particularly against NZD)."

"With a strong market perception that further USD/JPY intervention is likely in the near future, EUR/JPY is also likely to be sold on any rally today."

"The yen has been the strongest of the G10 currencies this month, and the market's reluctance to be caught out by intervention is clearly having an impact."

"Another spike in oil prices could easily reverse the recent improvement in risk sentiment, however, and caution still seems warranted."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)