MUFG Research discusses the latest wave of yen buying intervention.

" The OTC FX margin retail positioning data for June ahead of the intervention revealed a swing from yen shorts against all currencies reported combined to yen long. The yen long position was the largest since October 2023. The primary currency pair explaining this shift on a combined basis was in fact USD/JPY. The USD/JPY short position increased in June to a record total. The implied short USD/JPY position was USD 17.65bn which as can be seen historically is an extreme position and by some distance a record. The position is larger than the probable total size of the intervention undertaken last week," MUFG notes.

"It would imply that USD/JPY grinding higher throughout June incentivised retail margin traders to build USD/JPY short positions further in anticipation of eventual intervention. The May position was also short but considerably smaller. We can also assume that following intervention Japanese retail traders were quick to liquidate and were likely active buyers given the historic short position that was in place.

So Japan’s retail sector was likely a key buyer of USD/JPY on the decline during intervention, curtailing some of the impact of the MoF’s record yen buying intervention," MUFG adds.