USD/JPY has broken above the 149 level. Economists at MUFG Bank analyze Yen’s outlook.
Opposition to currency weakness remains firm
We see a high probability of intervention but only after a break above the 150 level when there is a high probability of fuel volatility and a cessation of ‘chaotic’ price action that would justify intervention by the MoF.
The authorities in China have also upped their rhetoric opposing CNY weakness as well. Actions to curtail upside moves in USD/CNY would certainly help Tokyo in its battle to limit JPY weakness.
We see the risks still skewed to the upside for both USD/JPY and USD/CNY given the US Dollar momentum but opposition to currency weakness in Tokyo and Beijing remains firm.
