S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
MUFG’s Michael Wan highlights that the Japanese Yen (JPY) has strengthened sharply, with USD/JPY dropping from around 164 after suspected intervention by Japan’s Ministry of Finance (MoF) and confirmed joint action with the US Treasury. He notes that past joint JPY interventions often coincide with turning points in USD/JPY, but stresses that fundamentals must shift for a durable move lower.
Historic joint action in Yen markets
“The Japanese Yen strengthened further below the 158 level heading into the weekend, with the media including the FT and Bloomberg reporting that the US Treasury intervened to strengthen the Japanese Yen on Friday by selling Euros to buy Yen.”
“In Asia morning time, Japan’s Finance Minister Satsuki Katayama released a statement confirming that both Japan and the US Treasury intervened on Friday, and that they will not hesitate to conduct further joint intervention if necessary in close coordination with the US.”
“Historical episodes of joint JPY intervention show that these events have typically taken place around key turning points in USD/JPY, but this is not always the case and tends to take some time before the broader trend changes.”
“For instance, in June 1998, USD/JPY fell sharply from 146 to 136 within a few days, helped by joint FX intervention, but it took at least two more months after that and shifts in the underlying dynamics of the Asian Financial Crisis before USD/JPY’s longer-term trend broke.”
“Overall, while we think that the joint intervention is certainly historic and significant, and could certainly play an important role in the short-term in clearing out Yen shorts, the fundamentals likely still need to change for a more durable move lower in USD/JPY.”
