Synopsis:

Amidst prevailing assumptions that Japan has refrained from FX interventions to bolster the yen, recent statements from Japanese Vice Finance Minister Masato Kanda have reignited market speculation. ING delves into these developments, forecasting a bearish outlook for AUD/JPY, with a short-term target positioned at 92.

Key Takeaways:

1. Intervention Speculations Resurface: The consensus that Japan hasn't been actively intervening in the FX market to strengthen the yen is questioned. Kanda's comments suggest a departure from real-time intervention confirmations, contrasting with Japan's transparent approach in September-October 2020.

2. Awaiting Official Data: Clarity on Japan's actual market actions will come with the Ministry of Finance's intervention statistics, scheduled for release on 31 October. This data is pivotal in confirming or debunking the market's intervention theories.

3. Potential Impact on Currency Pairs: While definitive evidence of Japanese intervention isn't expected to reverse the prevailing USD/JPY trend, it could bolster confidence in strategies favoring yen outperformance against other crosses. Specifically, AUD/JPY is under scrutiny, with expectations of depreciation.

4. Targeting AUD/JPY Movement: ING maintains a bearish perspective on AUD/JPY, driven by the intrigue surrounding Japan's potential stealth intervention and other market dynamics. The firm sets a near-term movement target for the pair at 92, anticipating possible yen strength.

5. Market Strategy Amid Uncertainty: Traders and investors are advised to navigate with caution, considering both the speculative nature of the intervention and upcoming official intervention data. These elements are likely to influence short-term trading strategies, especially concerning JPY crosses.

Conclusion: ING highlights the market's rife speculation regarding Japan's covert yen-supportive interventions, contributing to an air of uncertainty that could influence currency pair dynamics, particularly AUD/JPY. As the market awaits Japan's official intervention data, the potential for a strategic shift in yen-related trades looms, prompting investors to exhibit caution and vigilance in their near-term strategies. This landscape suggests opportunities for those eyeing yen outperformance in cross currency pairs, underscored by ING's bearish stance on AUD/JPY.