Authorities abandon pre-announced warnings, raising costs for traders betting against the yen amid its 40-year lows.
Japan has shifted to unsignaled currency intervention, aiming to catch short yen positions off guard. The tactic increases risks for traders who previously relied on verbal warnings before Ministry of Finance action, heightening volatility around key data releases like US payrolls.
The previous intervention in late April to early May saw a record 11.7 trillion yen ($72 billion) spent, though the yen’s decline resumed shortly after. Despite efforts, the yen remains near 40-year lows, trading around 162.50 per USD, driven by a persistent policy rate gap between the Bank of Japan and the Federal Reserve.
Markets now face heightened two-way risk in USD/JPY, with traders wary of sudden moves around local data or Fed policy shifts. The lack of clear intervention triggers adds uncertainty, though structural yen weakness persists due to divergent monetary policies.