As USD/JPY continues to test a rise into the 160-yen range, additional intervention near the level of coordinated Japan-US intervention is being viewed as a risk. Speculation surrounding the level at which intervention was carried out at the end of July remains strong.
USD/JPY continues to test the 160-yen range, with dollar buying and yen selling supported by the market backdrop of higher oil prices. At the same time, the level at which coordinated Japan-US intervention is believed to have been carried out on 31 July remains in mind, and caution over additional intervention persists.
In European and US markets, persistently elevated oil prices are expected to continue weighing on market conditions, while USD/JPY is expected to be seen moving back above the 160-yen level. Tonight's key market drivers are scheduled US housing-market indicators and inflation-related data.
Tonight's scheduled events include the release of the US July import price index, housing starts, building permits, industrial production, capacity utilization and pending home sales index. Economic data from Europe and the US, including the ZEW economic sentiment surveys, are also cited as market drivers to watch.
USD/JPY is expected to remain influenced by market caution and the possibility of intervention, and another episode in which coordinated Japan-US intervention is discussed cannot be ruled out.