One week after Japan and the US carried out coordinated intervention for the first time in approximately 30 years, USD/JPY, after briefly reaching 155 on the intervention, has given back half of its gains, and market focus has shifted to the Bank of Japan's monetary policy management.
The US Treasury and the Bank of Japan carried out coordinated intervention on 31 July, and USD/JPY briefly surged to 155 immediately afterward, but the gains did not hold. The pair has now returned to around 158.50, giving back nearly half of the move.
Market participants say the intervention curbed short-term yen-selling positions, but the direction of the currency will be determined by the US–Japan interest-rate differential and the Bank of Japan's policy stance. Robert Sorkin (ロバート・ソーキン) of PGIM Fixed Income is skeptical about the intervention's long-term effectiveness and has warned of a possible reversal.
US Treasury Secretary Scott Bessent (ベッセント) said intervention sends a signal, but policy determines the direction, suggesting that the US government takes an optimistic view of Japan's policy stance. Markets are closely watching Bank of Japan Governor Ueda Kazuo (植田和男)'s next move.
Goldman Sachs says coordination between Japan and the US will not weaken the dollar's dominance, but rather demonstrates the practical utility of dollar reserves. Details of the coordinated intervention, including measures involving euro sales, have also been reported, drawing attention to the relationship with the ECB.