Signs of U.S.-Japan Yen Intervention Emerge as Short Positions Leave Room for Adjustment: Nomura
According to foreign media reports, the U.S.
According to foreign media reports, the U.S. Treasury, through the Federal Reserve Bank of New York, carried out an intervention operation on July 31 by selling EUR/JPY, joining Japan’s efforts to curb the yen’s depreciation.
A key signal was that Finance Minister Bessent’s notebook was photographed with the words “buy yen $5-10bn.” Bessent also said that the yen was “severely undervalued.” Japan’s authorities are estimated to have conducted interventions totaling about JPY 10 trillion on July 30-31.
CFTC data showed that noncommercial net short yen positions stood at $12.5 billion as of July 28, the largest short position since July 2024.
Nomura believes the U.S. motivation for supporting intervention is concern that yen depreciation could push up inflation in Japan and undermine stability in the bond market. The U.S. may also increase pressure on the Bank of Japan to accelerate the normalization of monetary policy.
If coordinated intervention is confirmed, short-term position adjustments could accelerate, and USD/JPY could accelerate toward below 155. The report emphasized, however, that the psychological impact of coordinated intervention would be more important than its actual size. It also said that the United States chose to sell euros rather than dollars to avoid encouraging China and other countries to conduct similar interventions by selling their own currencies.
Bottom line: If official confirmation of coordinated U.S.-Japan intervention in the yen is combined with potential BOJ rate hikes, USD/JPY could break below 155. A lasting reversal of the yen’s trend would still require support from fundamentals.
This is a foreign-exchange strategy report and does not address specific stocks or sectors. At the macro level, it is favorable for yen bulls and the Japanese bond market. A stronger yen could create short-term pressure for Japan’s export-oriented companies, although the report did not analyze any specific companies or sectors.
Market expectations for coordinated intervention have not yet been fully established. CFTC yen short positions still have substantial room for adjustment and have not yet been priced in.
Catalysts identified in the report include: whether Finance Minister Katayama will brief reporters on August 3 about U.S.-Japan efforts to correct the yen’s depreciation; whether U.S. officials will confirm participation in coordinated intervention; changes in expectations for a BOJ rate hike at the September policy meeting; a meeting between Bessent and Governor Ueda at the G20 finance ministers’ and central bank governors’ meeting in late August; and further adjustment in yen short positions indicated by CFTC positioning data.
A key signal was that Finance Minister Bessent’s notebook was photographed with the words “buy yen $5-10bn.” Bessent also said that the yen was “severely undervalued.” Japan’s authorities are estimated to have conducted interventions totaling about JPY 10 trillion on July 30-31.
CFTC data showed that noncommercial net short yen positions stood at $12.5 billion as of July 28, the largest short position since July 2024.
Nomura believes the U.S. motivation for supporting intervention is concern that yen depreciation could push up inflation in Japan and undermine stability in the bond market. The U.S. may also increase pressure on the Bank of Japan to accelerate the normalization of monetary policy.
If coordinated intervention is confirmed, short-term position adjustments could accelerate, and USD/JPY could accelerate toward below 155. The report emphasized, however, that the psychological impact of coordinated intervention would be more important than its actual size. It also said that the United States chose to sell euros rather than dollars to avoid encouraging China and other countries to conduct similar interventions by selling their own currencies.
Bottom line: If official confirmation of coordinated U.S.-Japan intervention in the yen is combined with potential BOJ rate hikes, USD/JPY could break below 155. A lasting reversal of the yen’s trend would still require support from fundamentals.
This is a foreign-exchange strategy report and does not address specific stocks or sectors. At the macro level, it is favorable for yen bulls and the Japanese bond market. A stronger yen could create short-term pressure for Japan’s export-oriented companies, although the report did not analyze any specific companies or sectors.
Market expectations for coordinated intervention have not yet been fully established. CFTC yen short positions still have substantial room for adjustment and have not yet been priced in.
Catalysts identified in the report include: whether Finance Minister Katayama will brief reporters on August 3 about U.S.-Japan efforts to correct the yen’s depreciation; whether U.S. officials will confirm participation in coordinated intervention; changes in expectations for a BOJ rate hike at the September policy meeting; a meeting between Bessent and Governor Ueda at the G20 finance ministers’ and central bank governors’ meeting in late August; and further adjustment in yen short positions indicated by CFTC positioning data.