Japanese Yen: Verbal intervention fails to move JPY against US Dollar – Scotiabank

Scotiabank’s Shaun Osborne and Eric Theoret note USD/JPY is little changed despite strong verbal intervention from Finance Minister Katayama, who warned of decisive action at any time. Markets remain unimpressed, given repeated rhetoric and limited impact from actual Yen buying. They recall recent data showing a significant sentiment shift toward the Japanese Yen among local retail FX traders, who may be more attuned to intervention risks.

Katayama warnings and intervention expectations

"The JPY is little changed despite Finance Minister Katayama deploying aggressive verbal intervention in its support earlier."

"Katayama threatened “decisive action at any time”. That ranks as one of the strongest warnings of impending intervention action in recent weeks."

"But markets are unimpressed, reflecting the frequency of verbal intervention and the ineffectiveness of actual yen buying."

"Recall, however, that recent data reflected a very significant sentiment shift in favour of the yen among local, Japanese retail FX traders who may have a sense of intervention risks."