USD/JPY touched 160.40, its highest level since the US and Japan carried out joint intervention on July 31. The pair then reversed to 159.60 within 20-25 minutes, and traders are weighing whether the drop reflects a Tokyo rate check or nerves about provoking another intervention.
USD/JPY pushed above the 160.00 mark and touched a high of 160.40, the pair's strongest level since July 31. That date marked the last time the US and Japan acted in joint intervention to defend the yen.
After a brief pullback, the pair then dropped quickly to 159.60 in the space of 20 to 25 minutes. Traders are debating whether the move was a rate check from Tokyo or simply nerves among market participants wary of overstepping boundaries that could invite action from Washington or Tokyo.
Either explanation is plausible, but if it was a rate check, its effectiveness appears weaker this time. Japan has been intervening since April, yet has not executed those efforts with much finesse, and the timing of its actions continues to leave something to be desired.
Japan is also fighting a tough backdrop, as fundamentals keep running against the yen in nearly every direction. This week, global bond yields have surged higher again, a trend that works against any attempt to prop up the currency and raises the odds that the same dynamic resurfaces within weeks.
Source: Investinglive
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