There was some profit-taking and selling in USD/JPY yesterday despite a higher move in Treasury yields. And I would attribute that to fears ahead of the BOJ today, just in case the Japanese central bank produced a more hawkish message. But alas, they didn’t deliver on that front and now the yen has fallen back as a result:
USD/JPY 5 mins chart
There is still BOJ governor Ueda’s press conference coming up later but anything short of reiterating a “quiet exit” is not going to fly with market participants surely. The supposed leak a few weeks back led to some quarters of the market even changing their call on the BOJ outlook.
However, if it is all just intended to jawbone the currency and put up a bit of verbal intervention, that might just embolden yen shorts even more this time around. That being said, we are moving closer to that crucial intervention mark – perhaps we already are there – near 150.
Anyway, if Ueda doesn’t back up his words from before, it’s hard to imagine any real let up on the pressure against the yen currency. At this point, the only thing that can switch up the fortunes for the yen is a BOJ pivot to being more hawkish. And after having been disappointed time and time again by Ueda over the last six months, I’m not sure that is going to change today for yen bulls.