Credit Agricole CIB Research discusses the latest IMF warning about the scope of Japan's losing its free-floating status.

"The IMF has warned that Japan risks losing its if it intervenes in its exchange rate more than three times in six months and/or each intervention phase lasts more than three days. Japan's Finance Minister Satsuki Katayama has also recently referred to the IMF rule, but also maintains that authorities stand ready to take bold action against speculative action in FX. According to the IMF rule, Japan can conduct only two more interventions lasting three days or less before November," CACIB notes.

"Investors have taken these headlines as a greenlight to push USD/JPY back higher and above the 157 level we have previously referred to as the new line in the sand for the MOF. Indeed, when approaching 158 today in Asia, USD/JPY suddenly fell by over 1.5% suggesting another round of FX intervention. It is the final day of Japan's public holidays, but liquidity could remain low the rest of the week as Japanese extend their holidays to the rest of the week. We continue to think this lower liquidity offers opportunity for effective FX intervention," CACIB adds.