JPY: Verbal intervention continues, ahead of G7 meetings – Nomura

By FXStreet Yujiro Goto, Research Analyst at Nomura, notes that the USD/JPY has been recovering after breaching 106 last Tuesday, without clear catalysts.

Key Quotes

“JPY long positions remain large, while USD positioning at the IMM has already turned to net short positions against major currencies, likely causing position unwinding of JPY long positions accumulated after the BOJ’s disappointment.

In addition, since last week comments on the FX market by Japanese policymakers have been frequent. Finance Minister Aso today repeated that Japan can intervene to stabilise currencies if necessary, after stating it is natural that Japan has the means to intervene yesterday.

Prime Minister Abe also commented on FX markets last week during his Europe visit, repeating that “abrupt currency moves are not desirable”. He also said “exchange rates must be stabilised” and he said he may discuss FX markets at the G7 summit meeting if necessary. The head of Keidanren, Japan’s biggest business lobby, Mr. Sakakibara, yesterday said it is reasonable for Japan to intervene in the market amid rapid and speculative appreciation, while the lobby would support JPY intervention if it occurs. As the upper house election approaches, avoiding further JPY appreciation will now likely be a higher priority for the government. …read more

Source:: FX Street