The yen came under stronger depreciation pressure after the US CPI release, even following the intervention. Market attention is focused on the Japanese authorities' next move.
Yesterday's US CPI for July was in line with market expectations, and USD/JPY temporarily fell to around ¥158. The pair subsequently recovered against a backdrop of rising US long-term interest rates, at one point returning to the ¥159 range during the day.
In today's Tokyo market, yen-buying activity, including possible intervention by the Bank of Japan, remains a key focus. The release of the corporate goods price index and trends in import prices will also be watched, although some market participants believe they are unlikely to trigger a major move.
Since the intervention, USD/JPY has risen by more than ¥2 from its level in the early hours of 3 August and by more than ¥4 from the day's low. Some market participants have pointed out that the market distortion caused by the intervention is strengthening pressure for further yen depreciation.
The course of the yen's depreciation trend will depend on whether there is follow-up intervention, and some market participants believe that USD/JPY could move above ¥164 if no actual intervention takes place. As import prices continue to rise, some voices are also skeptical about the outlook for a Bank of Japan rate hike.