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May 02 - 12:55 PM

SocGen Reports on Suspected Intervention in USD/JPY Post-FOMC, Cites Limited Impact

By eFXdata  —  May 02 - 11:00 AM


Societe Generale discusses the recent suspected intervention by Japanese authorities in the USD/JPY exchange rate following the Federal Reserve's latest monetary policy decision, noting the limited impact of these actions on reversing the currency's gains.

Key Points:

  • Timing and Context: The intervention reportedly occurred amidst key global events, including the Champions’ League semi-final, suggesting a strategic choice of timing to maximize impact.

  • Immediate Market Impact: The intervention led to a 3% decrease in the USD/JPY rate, although half of this reduction was quickly recouped. The resilience of the USD/JPY rate post-intervention highlights the ongoing challenges faced by the Bank of Japan (BoJ) in managing the exchange rate amidst differing monetary policy trajectories between the U.S. and Japan.

  • Volume of Intervention: While exact figures are awaited, early indications suggest that this week's total intervention may be the most substantial single-week effort by the BoJ to date.

  • Yield Differentials and Market Dynamics: The continuing wide yield differentials between the U.S. and Japan are a major force driving the USD/JPY higher, complicating the BoJ's efforts. The yield gap underscores the fundamental economic differences currently influencing the currency pair.


SocGen expresses skepticism about the immediate effectiveness of the BoJ's intervention strategy, given the significant yield differentials between the U.S. and Japan that continue to apply upward pressure on USD/JPY. The report suggests that without a fundamental shift in either monetary policy direction or economic performance, interventions might only provide temporary relief, with broader economic factors ultimately driving currency value. I

Société Générale Research/Market Commentary


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