After several rounds of warning and nearly 25 big figures later in the USD/JPY, Japan finally stepped up and intervened in the yen. At this juncture, the area 140-145 in USD/JPY seems like a plausible trading range at the momentreport economists at TD Securities.
The Bank of Japan opens Pandora’s box
“Japan has finally intervened in the currency. We have been of the opinion for a long time that ‘yintervention’ is a losing proposition.
“Lost in the noise of intervention there was a quite noticeable change in the BoJ’s stance on inflation. Specifically, they noted that there are signs that underlying inflationary pressures are building. We think that’s a pretty remarkable inclusion.”
“With the likely recognition that intervention is not a viable long-term solution, the Bank of Japan may be preparing for a shift in yield curve control sooner than the market perceives. October should be seen as the closest meeting to reality in a long time.
“For now, we think USD/JPY will try to carve out a range in the 140-145 zone for now“.
Source: Fx Street