MUFG Research on the scope for JPY buying intervention as USD/JPY approaches the key 160 level.

"With USD/JPY moving back towards pre-joint intervention levels from late July/early August, it has prompted Japanese officials to step up verbal intervention overnight to support the yen. Japan’s top currency official Atsushi Mimura stated overnight that “I have a strong impression that the currency moves over the past few days have been too fast”. He added that “it’s too early to forget what happened this summer”," MUFG notes.

"It sends a strong signal that Japan is prepared to intervene again to support the yen which should help to limit further upside for USD/JPY beyond 160.00. However, it will be even more difficult to reverse the upward trend for USD/JPY right now with the USD strengthening broadly on the back of expectations for faster Fed rate hikes. If the rising risk of further intervention helps to stabilize USD/JPY while the US dollar continues to strengthen more broadly it could see non-USD yen crosses moving lower," MUFG adds.