MUFG Research discusses the scope for another wave of JPY intervention by Japan's MoF.

"Yesterday USD/JPY moved to within touching distance of the high from July 2024 at 161.95 but failed to break above. It is viewed as important level among market participants encouraging renewed speculation that Japan could intervene again soon to support the yen.

At the same time, intervention speculation has been encouraged by media reports that a phone call was held yesterday between Japanese Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent. After the call, Finance Minister Katayama told reporters that the two had agreed to take “bold steps” on currencies if needed, and said the two nations are increasingly “aligned” on foreign exchange rate policy," MUFG notes.

"The phone call was described as a follow-up to last week’s G7 meeting. The comments will encourage expectations that the Japan and the US could intervene together to lower USD/JPY which would likely prove more effective than the recent unilateral action undertaken by Japan in late April and early May," MUFG adds.