Tokyo Inflation to trigger yen Intervention? But at what price?

Recent remarks made by Masato Kanda, Japan's vice-finance minister for international affairs, have led to heightened cautiousness regarding potential actions by authorities to support the yen through intervention.

The USD/JPY has comfortably surpassed the 150.000 threshold, which historically has prompting interventions by the Bank of Japan to limit the weakness in the yen. This precedent was observed in 2022 when the currency reached 151.950 against the US dollar.

But have the intervention goal posts moved?

Maybe only slightly. Credit Agricole’s FAST FX model suggests a selling strategy for USD/JPY if it crosses 152.20.

Anticipated inflation data for Tokyo, scheduled for release later this week, could serve as a potential trigger for intervention. A higher-than-expected reading may positively impact the JPY, indicating bullish sentiment and potentially help the BoJ avoid the need to intervene. Conversely, a lower-than-anticipated figure could exert a bearish influence on the JPY.