Scotiabank strategists Shaun Osborne and Eric Theoret report USD/JPY is steady but elevated, with recent gains already surpassing prior intervention-trigger levels. A 25 bps Bank of Japan (BoJ) hike on Tuesday is widely anticipated, and markets price nearly one more increase by December. They flag concerns over communication as Governor Ueda will not attend, and see limited resistance up to 162 with support in the 156–158 band.

Yen weakness raises intervention concerns

"The yen’s ongoing weakness is a worry for market participants, government officials, and central bank policymakers, sparking concerns of intervention in the former as the latter consider the implications for inflation."

"The latest weakness in spot (gains for USD/JPY) have already cleared levels that sparked earlier currency management activities (price checking in January, intervention in late April/early May)."

"Domestic releases have been limited and the calendar is empty ahead of Tuesday’s BoJ rate decision. A 25 bps hike is widely anticipated and markets are pricing nearly one additional hike by December."

"Gov. Ueda is not attending, leaving market participants somewhat concerned about the central bank’s communication specifically the post meeting press conference."

"For USD/JPY, we see limited resistance between current spot and 162 and we would anticipate support in the 156/158 range."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)