Positive set-up for USD/JPY today with risk assets rebounding. US Treasuries are slumping with 10s up to 1.89% as the benchmark shifts to yesterday’s new issue. Technically, 10s defended the key 1.79% level yesterday and that points to better upside.
In addition, the MOF has started to jawbone.
Citi is out with a report saying that the recent pattern in intervention suggests its a move to subsidize exporters rather than an aim for a sustained shirt in USD/JPY. Since it’s midway through the month, there is no urgency to intervene and since the decline has not been in a straight line, there has been time for exporters to hedge. Overall, they see intervention at these levels as unlikely.
