USD/JPY trades with a soft tone near the 156.90 area on Monday as the Japanese Yen (JPY) holds the bulk of the gains secured at the end of last week, when intervention by Japanese authorities and a relatively hawkish Bank of Japan (BoJ) policy announcement triggered a sharp…
wind in the pair. Speculation that officials remain active in the market continues to cap attempts at recovery
Japanese authorities have offered no confirmation of last week’s operation, but several news outlets reported the invention last Friday based on interviews with sources close to the BoJ. Ministry of Finance officials have limited their commentary to warnings that excessive, one-sided moves are undesirable and that they stand ready to act against disorderly conditions. That deliberate ambiguity is keeping traders reluctant to rebuild large Yen-short positions, with liquidity thinning around the figure levels where intervention is suspected to have been executed.
Attention now turns to the release of the BoJ Monetary Policy Meeting Minutes during the Asian session on Wednesday, which covers the June gathering and precedes both the intervention episode and last week’s rate decision. While the document is dated, investors will scrutinize it for evidence that the hawkish tilt seen in the latest vote split was already building within the board. Any indication that a wider group of members had begun flagging upside inflation risks would strengthen the case for a follow-up rate increase and provide the Yen with an additional pillar of support.