Institutional flows show persistent USD buying and JPY selling despite recent joint FX intervention by U.S. and Japan authorities.
Institutional investors continued purchasing USD and selling JPY following the Bank of Japan’s June rate hike and late-July joint FX intervention aimed at weakening USD/JPY. Real money accounts treated both events as opportunities to accumulate USD positions, challenging the effectiveness of official actions.
After the June 17 BoJ hike, investors interpreted Fed Chair Kevin Warsh’s hawkish FOMC stance as a signal to favor USD over JPY. Similarly, late-July intervention failed to deter USD buying, with long-end Japanese government bond yields remaining elevated and USD/JPY trading lower.
The yen’s decline since July 31 raises doubts about the durability of FX interventions, as market participants consistently fade official efforts to support the currency.