ING’s Francesco Pesole notes that a reported Bank of Japan rate check briefly pushed USD/JPY below 157.0 and suggests authorities may focus on the pace of moves rather than a specific level. However, with the Fed sounding more hawkish than the Bank of Japan, ING still sees room for further USD/JPY gains and considers a return to 160.0 consistent with current conditions despite elevated intervention risk.
BoJ vigilance but upside remains
"A reported Bank of Japan rate check on Friday pushed USD/JPY below 157.0. If confirmed, it may suggest that Japanese authorities are focused more on the pace of moves over a rolling x-day period than on defending a specific level."
"The hope is that this approach avoids creating a clear line in the sand for markets to target and helps keep positioning cautious. Nevertheless, the Fed has sounded distinctly more hawkish than the Bank of Japan this month, leaving room for further USD/JPY gains."
"Against that backdrop, a return to 160.0 still looks consistent with prevailing conditions, although intervention risk remains clearly elevated."
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