Yen Suddenly Surges To Bessent Intervention Highs... No One Knows Who/Why...

Yesterday we noted the sudden spike in JPY which prompted numerous desks to speculate on an intervention.

It wasn't large - which made many suggest it wasn't or that it was a tester for liquidity.

Today, we are seeing something different - a steady bid for the Japanese currency lifting it to post-Bessent/BoJ highs...

The slope (not entirely vertical) made some reject the idea of an intervention...

“I don’t think the move was an intervention or rate check, but there is a lot of caution around the 160 level,” said Marito Ueda, president of SBI FX Trade.

But maybe they have a new method of intervention rather than just dump a few billion dollars all at once and rip through all the stops.

The move “shows how sensitive positioning has become,” said Nathan Thooft at Manulife Investment Management.

“The market got the message that the authorities want a stronger yen.”

The yen began strengthening earlier on Wednesday, after a BOJ board member raised the possibility of outsize or back-to-back interest-rate hikes.

Overnight index swaps are now more than fully pricing in a standard 25 basis point rate hike at the BOJ’s September meeting. Pricing suggests only a very low likelihood of a 50 basis point move.

“The yen’s gains followed comments from reliably hawkish BOJ board member Takata,” said Tony Sycamore, an analyst at IG Australia.

“It’s possible we saw some pre-positioning going through for a weak nonfarm payrolls report tomorrow night,” said Sycamore.

“I am skeptical based on the size of the move,” said Andrew Hazlett, a foreign-exchange trader at Monex Inc., referring to the possibility of intervention on Wednesday.

There is no official comment from either the US Treasury of Bank of Japan.