MUFG Research discusses the latest wave of JPY intervention.

"The yen has continued to strengthen at the start of this week after Japanese Finance Minister Katayama confirmed overnight the Japan intervened alongside the US to support the yen on Friday. The statement justified the joint action to counter excessive volatility and disorderly movement in the yen in recent months, and emphasized that “we will not hesitate to conduct further joint intervention”. It was the first joint intervention involving Japan and the US since 18th March 2011 when joint intervention was undertaken after the 11th March Tohoku earthquake and tsunami to weaken the yen...

The US may also have secured an agreement with Japan to allow the BoJ to continue to normalize policy as part of the decision to take part in joint intervention. Japan’s Chief Currency official Atsushi Mimura stated overnight that we will respond to FX in coordination with monetary policy while adding that “I have shared understanding with the BoJ”," MUFG notes.

"Overall, the latest development give us more confidence in our forecasts that the yen is in the process of bottoming out. The threat of further joint intervention and a faster pace of BoJ hikes should provide more support for the yen, and discourage speculators from running elevated short yen positions," MUFG adds.