Brief Yen Surge Shows Traders Highly Sensitive to Intervention

(Bloomberg) -- The yen’s sudden surge in value Tuesday was the likely result of traders increasingly sensitive to the risk of currency intervention by Japanese policymakers and not the result of any official action in foreign-exchange markets, according to Nomura Plc.

Japan’s currency rallied about 0.5% in just minutes on Tuesday
Impulse still strong to buy USD-JPY on dips, strategists warn

Dollar-yen witnessed a brief reversal in New York morning trading, falling from 154.76 to a session low of 154.04 within a matter of minutes, before giving back most of that drop. With the pair at a 34-year high and the uptrend in dollar-yen intact, traders are mindful of any sharp moves that could be Japan’s Ministry of Finance intervening — something that last happened in September and October of 2022.

“The market is becoming more sensitive to sudden falls in USD/JPY, as the pair has approached the milestone level of 155,” Nomura currency strategists Yujiro Goto, Yusuke Miyairi and Jin Moteki wrote in a report Tuesday. “We place more importance on the fact that USD/JPY did not show a continued fall after the initial drop,” they added, noting that today’s sharp move could make the market more aware of potential intervention and “limit the pace of ongoing yen depreciation.”

At Monex Inc., foreign-exchange trader Helen Given agreed that the price action for yen Tuesday was the result of markets increasingly sensitive to intervention risk. “As we move toward USD/JPY at 155, traders are jumping on any dip they see so they don’t get hung out to dry,” Given said.

Reporting by Carter Johnson, George Lei and Anya Andrianova

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