Key Points:

  • Interest rate moves are determined by markets
  • Monetary policy falls under the jurisdiction of the BOJ
  • Government will continue to work closely with the BOJ
  • Will not pursue fiscal policies that undermine market confidence
  • Closely monitoring market movements with a high sense of urgency
  • Always monitoring daily market moves and economic indicators
  • Will take appropriate action on FX at all times as needed

Market Context

This is verbal intervention and jawboning aimed at keeping traders in check. Of all the factors currently at play, the softer US jobs report is the biggest contributor as markets look to close out the week.

The weaker jobs data is giving Tokyo officials added breathing room, with the dollar also pulling back broadly. Intervention risks remain elevated given the thin liquidity conditions expected later in the session.

USD/JPY is trading down 0.2% to 160.78, but unless there is a material shift in the fundamentals, the path of least resistance remains tilted to the upside — at least until Japan steps in with direct intervention to push price action lower.