The Japanese yen has edged lower on Tuesday. USD/JPY is trading at 158.42 in the European session, up 0.28% on the day at the time of writing.
BoJ likely intervened after US inflation report
The Bank of Japan has been playing a cat-and-mouse game with currency speculators looking to take advantage of the yen’s descent. The BoJ is suspected to have intervened in the currency markets last Thursday to the tune of around $22 billion, based on an analysis of BoJ accounts. The suspected intervention occurred soon after the US released the June inflation report. The weaker-than-expected inflation reading sent the US dollar reeling against the major currencies and the BoJ likely intervened while the yen was in the midst of strengthening against the dollar.
This would represent a new tactic for the Bank of Japan, which in the past has intervened when the yen was on a downswing. The new tactic caught the markets by surprise as the BoJ is looking for new ways to deter currency speculators. The latest intervention propelled the yen from 161.58 against the dollar to 157.44, a massive gain of 2.4% for the Japanese currency, which was also boosted by the soft US inflation report.
Japan’s chief currency diplomat, Masato Kanda wouldn’t confirm or deny that Tokyo had intervened, as officials are intent on keeping market participants in the dark about currency interventions. We won’t know for sure that the BoJ intervened until the end of the month, when the BoJ publishes official intervention data. Although previous interventions have provided short-term relief only, Japan will likely continue to resort to interventions in a bid to defend the yen.
USD/JPY technical
-
USD/JPY is testing resistance at 158.57. Above, there is resistance at 159.13.
-
There is support at 157.88 and 157.32.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD retreats below 1.0900 after US data
EUR/USD stays under modest bearish pressure and trades below 1.0900 in the second half of the day on Tuesday. The US Dollar holds its ground following the Retail Sales data for June, making it difficult for the pair to regain its traction.
GBP/USD loses traction, drops to 1.2950 area
GBP/USD struggles to keep its footing and trades in negative territory at around 1.2950 in the American session. June Retail Sales data from the US helps the US Dollar stay resilient against its rivals, not allowing the pair to build on previous week's gains.
Gold renews multi-week highs above $2,440
Following a short-lasting correction in the early American session, Gold gathers bullish momentum and trades at its highest level since late May above $2,440. The benchmark 10-year US Treasury bond yield stays in the red near 4.2%, supporting XAU/USD's rally.
Bitcoin price consolidates near $62,000 despite liquidation of $71.02 million in short position and surge in Open Interest
Bitcoin (BTC) sees a 3% price decline on Tuesday, trading around the $63,000 level at the time of writing. On-chain data shows a liquidation of $71.02 million in short positions and a rise in open interest.
ECB bank lending survey shows only modest pickup in expected loan demand
While the economy has returned to growth and interest rates are coming down, loan demand is only modestly improving as bank credit standards remain tight. For the ECB, there is nothing in the data that moves the needle for coming rate cuts.