Either way, the 140 area in USDJPY looks like a potential area of turbulence where more volatility is expected. In previous weeks we have heard more verbal interventions from the Bank of Japan and the Ministry of Finance, as well as their joint statement (a rare event).
The new lows in the yen this week and its more than 1.4% fall since the start of the day on Thursday make it necessary to keep events around the Japanese currency on the periphery of attention so as not to miss a possible spike in volatility in one direction or the other.
The yen’s weakening is a legitimate market trend linked to interest rate differential dynamics. But the speculation that the BoJ will not change policy by moving to higher interest rates and that the Ministry of Finance will not be burning through foreign currency for interventions is now embedded in the quotations.
