From Taisuke Tanaka, Strategist at Deutsche Bank:
The USD/JPY dropped from the ¥111's to the ¥108's after the BoJ's decision to postpone additional easing on 28 April and moved even lower into the ¥106's. Additionally, the US Treasury Department placed Japan on the list of monitored countries and commented that recent USD/JPY movement has been "orderly" in the semi-annual forex report issued on 29 April. We see a possibility of investors testing new lows for the USD/JPY in the lower ¥100 range as long as the US is not favorable toward intervention by Japan.
Japan's Finance Minister Taro Aso commented on 30 April that the current level of yen appreciation (in the ¥106 range) reflects a unilateral speculative shift and that Japan intends to respond as necessary and (the US report) does not put any constraint on Japan's response. However, we think it would be difficult for Japan to continuously implement large-scale intervention to keep the USD/JPY in a band of ¥105-110. We even see risk of invigorating the yen bulls with just a one-off intervention if it elicits criticism from the US side.
DB maintains a short USD/JPY position from 113.20 (from Feb22), with a stop at 116, and a target at 105 (spot at 106.50).
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