USD/JPY has established above the 145 level. Economists at Scotiabank analyze the outlook for the pair.
Intervention is a clear risk if USD/JPY approaches the 150 level
The finance minister commented last week that the authorities would respond appropriately to “excessive movements” in the exchange rate, but beyond that, finance officials have been quiet on currencies recently. Still, market participants understand that intervention is a clear risk if USD/JPY approaches the 150.00 level (the pair peaked at 151.95 in October last year) and the charts suggest that, after the USD/JPY advance USD/JPY above June high (just above 145.00), the risk of a retest of 150.00 is hard to ignore.
If defending the yen is a priority, direct intervention in the currency market and allowing slightly higher domestic yields to coincide (even roughly) with a recession in US bond yields (or some dovish signal from Fed policy makers) would be optimal from the point of view of the effectiveness of monetary policy.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
