USDJPY: Verbal Intervention (HSBC)

USD-JPY was capped overnight after jawboning by
Japanese authorities stoked intervention risks. Japan’s top currency chief Masato
Kanda warned against the recent one-way move in USD-JPY and mentioned that
authorities stand ready to take steps if needed. Additionally, Finance Minister
Shunichi Suzuki said he’s watching FX market developments with an even stronger
sense of urgency. The JPY has been the worst performing currency in G10 YTD. The
rather modest drop in USD-JPY overnight suggests the effectiveness of verbal
intervention is low, perhaps because there is still some breathing room before USDJPY
reaches the previous high close to 152. Japanese authorities last intervened in
September and October 2022, spending around USD60bn to defend the currency.