Credit Agricole sheds light on the recent developments in the USD/JPY exchange rate and offers insights into when Japan might opt for verbal or actual intervention.

Key Observations:

1. JPY’s Fair Value: Credit Agricole's FAST FX model indicates that the short-term fair value of JPY saw a weakening trend last week. The USD/JPY's fair value shifted from 140.40 to 142.43. The rise in short-term U.S. Treasury (UST) yields and the steepening of the UST yield curve primarily influenced this shift.

2. Factors Restraining Fair Value: A declining trend in both the Nikkei and oil prices played a role in countering the rise in the exchange rate's fair value.

3. Verbal Intervention by Japan: The significant move of USD/JPY beyond the critical 145 mark elicited a verbal response from Japan's Finance Minister, Shun’ichi Suzuki.

4. Post-Jackson Hole Interventions: Credit Agricole postulates that Japan's policymakers are likely to reserve their primary intervention measures, both in speech and action, for the period after the Jackson Hole Symposium, set to commence soon.

5. Overvaluation Mark: The bank's model suggests that the USD/JPY exchange rate would be considered significantly overvalued if it were to exceed 147.43 this week.

Conclusion: While the USD/JPY has shown notable fluctuations recently, Credit Agricole believes Japan's definitive interventions might be on hold until post the Jackson Hole event. The critical overvaluation threshold to watch out for, according to their model, is a move beyond 147.43.