Jpy Trades At 4 Week High

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Jpy Trades At 4 Week High

Japanese Yen (Jpy) Trades At 4-Week High

Japanese Yen (JPY) is seen trading at 4-week highs against the greenback on Friday. However, many believe that this appreciation of the JPY isn't natural, and the BoJ has intervened in the FX market to prop up the currency.

The rally in the Japanese Yen (JPY) started on Thursday when the currency was sitting at historic 38-year lows. At that time, the CPI (US) was released which showed consistent deflation in June. Now that the inflation is going down in a trend, the chances of an interest rate from the US Federal Reserve have increased.

Possible Intervention From Boj Officials

On Friday, another piece of data from the USA showed an increase in producer prices (US) during June. That's also led to a downtrend in the USD/JPY, which means that JPY now has the upper hand against the USD in the short term.

According to an analyst from Standard Charter Bank, there's a very high chance that the authorities have intervened in the FX market. He added that if the authorities intervened in the market on Thursday, there's a high chance that they did it on Friday.

He also commented on another scenario for the decline in the USD/JPY; It could also be attributed to the stop losses being taken out.

If we look at the B OJ's daily operations, it shows that around 3.37 - 3.57 trillion yen was spent by the central bank to support the Yen.

Another FX strategy from UBS added that the USD/JPY price action on Friday is a result of rate checking or an intervention. In some cases, BoJ asks for rate levels from the dealers, which can also cause the market to move in fear of intervention.

In a sense, the BoJ is still relying on the old tactics to control the FX market but the central bank will have to change tactics to keep their control.

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