Explore eFXplus Derived Data That Drive Results
A Data Partner of:
Oct 26 - 12:55 PM

Credit Agricole: Caution Prevails as USD/JPY Crosses 150, Intervention Triggers Absent

By eFXdata  —  Oct 26 - 10:45 AM

Synopsis: As the USD/JPY pair sustains levels above 150, market participants exhibit restraint, wary of provoking foreign exchange (FX) interventions. While Japanese officials' rhetoric hasn't signaled immediate action, two critical conditions for legitimate intervention - heightened volatility and deviation from economic fundamentals - are currently unmet. The upcoming FOMC and BoJ meetings are in focus, potentially influencing Japan's Ministry of Finance's (MoF) strategy.

Key Insights:

  1. USD/JPY Stability Over 150:

    • The pair maintains strength above the 150 threshold, a first in a year, amid cautious market sentiment. Investors are hesitant to instigate rapid surges, mindful of potential official counteractions.
  2. Intervention Signals Subdued:

    • Official commentary remains moderately concerning, lacking the urgency that precedes direct market actions. Current communication levels, assessed between 3 and 4 on a scale toward imminent intervention (7), suggest no immediate measures.
  3. Criteria for Intervention Unfulfilled:

    • The MoF's capacity to intervene relies on justifying such actions, particularly concerning volatility and economic fundamentals. Presently, both criteria remain unmet:
      • USD/JPY volatility is notably low, negating conditions that previously warranted U.S. Treasury-endorsed interventions.
      • The pair's ascent, synchronized with U.S. Treasury (UST) yield movements, aligns with fundamental economic indicators, offering no grounds for official interference.
  4. Strategic Communications Ahead of Central Bank Meetings:

    • Anticipating pivotal FOMC and BoJ gatherings, Japanese officials might intensify verbal interventions, aiming to preemptively stabilize market conditions. This tactic, seeking to eschew direct currency support, hinges on forthcoming policy clarifications.

Conclusion: Market circumspection prevails as USD/JPY holds over 150, with investors and officials alike navigating a delicate balance. Intervention prerequisites remain unfulfilled, underscoring the need for strategic patience and keen observation of central bank cues. The environment necessitates careful market engagement, prioritizing economic rationality and policy adherence.

Crédit Agricole Research/Market Commentary


  • eFXplus
  • End-user license agreement (EULA)


  • About
  • Contact Us


  • Terms of Service
  • Privacy Policy
  • Disclaimer
© 2023 eFXdata · All Rights Reserved