USD/JPY above 155, intervention risks rise

USD/JPY has risen north of the 155 figure this afternoon for the first time since 1990, further heightening the risk of MoF intervention to prop up the value of the JPY, with officials having already indicated their preparedness to step in and lean against what they view as potentially ‘excessive’ moves in the currency.

While the precise level at which intervention will take place remains unknown, such a situation is becoming an increasingly high probability, particularly as the USD continues to rally against almost all G10 peers, as the balance of risks to the FOMC outlook becomes increasingly hawkish, and ahead of Friday’s BoJ meeting, at which any policy shifts remain highly unlikely.

A dovish conclusion to said meeting could well be the catalyst for authorities to step in, with the speed, and potentially speculative nature, of any further weakness likely the key areas of focus in terms of potential government involvement in the market.