- A rare joint US-Japan intervention briefly halted the yen's decline, but the currency has returned toward 160 per US dollar after reaching above 163 in late July.
- US Treasury yields at multi-year highs are sustaining the US-Japan rate gap and supporting renewed yen carry-trade pressure.
- The 30-year US Treasury yield closed at 5.285%, near a fresh 19-year high, while the 30-year Japanese government bond yield closed at 4.141%.
Quotes
“Intervention can alter positioning and disrupt momentum, but it has not changed the fundamental interest-rate differential that continues to favour the dollar”
“That the yen has drifted [lower] despite a more hawkish Bank of Japan and direct intervention suggests investors still see US yields as the dominant variable.”