The Japanese yen surged nearly 3% on Thursday, marking its largest daily gain since late 2022. This sharp move, which some local media attributed to official buying, aims to support a currency that has been hovering at 38-year lows.
The U.S. dollar fell to as low as 157.40 yen immediately after data revealed that U.S. consumer inflation cooled more than expected in June. The rapid and substantial rise in the yen has led traders to suspect possible intervention by Japanese authorities, who last took similar action in early May.
Local Japanese television station Asahi, citing government sources, reported that officials intervened in the currency market. However, Japan’s Ministry of Finance, known for its reticence on foreign exchange interventions, has not confirmed these reports.
Market Reactions and Analyst Comments
Chris Scicluna, Head of Economic Research at Daiwa Capital Markets, London: “The Ministry of Finance won’t confirm this for some time, but the extent of the move strongly suggests they have acted, leveraging the post-U.S. CPI data.”
Helen Given, FX Trader at Monex USA, Washington DC: “Traders have speculated for months that any intervention by Japanese officials might be funded by selling their U.S. treasury holdings. Today’s significant move could be an indication of such activity. However, we need to see if this movement holds over the next week.”
Sameer Samana, Senior Global Markets Strategist at Wells Fargo Investment Institute, Charlotte, North Carolina: “Given that the largest part of the yen’s move occurred around the time of the CPI release, it seems more likely tied to inflation data rather than direct intervention.”
Geoff Yu, Senior Macro Strategist at BNY Mellon, London: “Rate differentials are clearly converging with the expectation of a September rate cut in the U.S. Hard data shows yen shorts are at a nearly three-year high, indicating minimal resistance to the yen’s rise.”
Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, New York: “I’d be surprised if there was intervention, considering the time zone and the fundamentals aligning with the CPI data. The move seems consistent with market responses to the fundamentals.”
Giuseppe Sersale, Portfolio Manager at Anthilia, Milan: “The yen’s sharp movement suggests a possible combination of short-term positioning adjustments and perhaps some official intervention, even though it hasn’t been confirmed.”
James Malcolm, Head of FX Strategy at UBS, London: “My guess is that this isn’t intervention. The market is heavily positioned, and if the dollar-yen drops, positions must be adjusted, leading to a classic carry unwind.”
Kenneth Broux, Head of Corporate Research FX and Rates at Societe Generale: “The move is likely driven by stops being triggered post-CPI release rather than intervention.”
Steve Englander, Head of Global G10 FX Research and North America Macro Strategy at Standard Chartered Bank NY Branch, New York: “The definitive CPI data likely prompted a cleanup of long dollar/yen positions, as rate differential narratives erode.”
Lee Hardman, Senior FX Strategist at MUFG, London: “When the market is heavily positioned one way and moves the other, it can trigger abrupt shifts. Long positions in dollar-yen were particularly stretched.”
Colin Asher, Senior Economist at Mizuho, London: “It’s most likely short covering, spurred by speculation of U.S. rate cuts following the negative CPI print. USD/JPY positioning was very stretched.”
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