Credit Agricole CIB Research discusses the scope for another wave of JPY intervention by Japan's MoF.

'According to MoF data released last week, the MoF still has USD1.3trn in FX reserves it can use to intervene in FX markets. It could therefore intervene on the scale it did in April-May by over 15 more times. The same FX reserve data released last week, however, also suggest Japan likely sold USTS to finance its record USD73bn of FX intervention in the April-May period. US Treasury Secretary Scott Bessent has said in the past that he would prefer Japan support the JPY via higher rates rather than FX intervention. The US government is becoming increasingly sensitive about the higher UST yields. So, investors could be thinking US-Japan politics could limit the MOF's ability to intervene," CACIB notes.

"As if to contradict these suspicions, Katayama continues to ramp up her verbal intervention in the FX market saying that she spoke to US Treasury Secretary Scott Bessent for almost an hour as part of a follow up to the G7 meeting last week. She also repeated that authorities remain prepared to take bold action in FX and that the agreement between the US and Japan on FX has not changed," CACIB adds.