Synopsis:

ING observes notable currency movements in the G10, highlighting the continued depreciation of low-yielders, especially the Swiss Franc (CHF) and Japanese Yen (JPY). With the Swiss National Bank adopting a dovish stance and no longer seeking a stronger CHF, attention shifts to JPY as USD/JPY approaches the 152 mark, a level that tests Japan's tolerance for FX intervention.

Key Points:

• Pressure on Low-Yielders: The CHF and JPY face significant sell-offs, with CHF's underperformance attributed to a dovish SNB stance, suggesting caution in anticipating a reversal.

• USD/JPY Testing Intervention Thresholds: USD/JPY's overnight touch of 152 continues to challenge Japan's FX intervention limits, potentially still within the "verbal intervention" range.

• Criteria for Actual Intervention: Actual FX intervention by Japanese authorities may require a further increase in USD/JPY, possibly closer to 155, focusing on the rate of change rather than specific levels.

Conclusion:

As USD/JPY tests the boundaries of Japan's FX intervention tolerance, market participants remain vigilant for signs of potential action by Japanese authorities. With the rate of change being a critical factor, further upward movement in USD/JPY could trigger more than just verbal warnings, posing significant implications for FX markets. The situation underscores the delicate balance central banks must maintain in managing currency strengths amidst evolving global economic conditions.