USD/JPY back on approach to 145 - reminder of the warning signs for BOJ FX intervention

Wow, what a Tuesday!

• Forexlive Americas FX news wrap: USD soars on CPI, equities crushed

• The initial reaction was to buy the US dollar, the secondary reaction was to buy the US dollar and the late-day reaction was to buy even more dollars.

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USD/JPY topped out ahead of 145 last week:

• Knock out options 145 in USD/JPY - defensive sellers ahead the level

• USD/JPY falls further on the day amid softer dollar, Kuroda jawboning

And with the high CPI number from the US overnight, its back threatening the level again.

I posted these earlier, of relevance:

• Here's what to watch for to warn of imminent Bank of Japan (BOJ) yen intervention

• The 4 things to watch prior to Bank of Japan FX yen intervention

Solo Bank of Japan intervention seems unlikely:

• USD/JPY BOJ intervention watch - intervention seen as unlikely without US coordination

And intervention could well backfire (be shrugged off by the market and prompt further USD/JPY buying) unless the BOJ changes policy. This high CPI number from the US might give the BOJ a reason to reconsider its 'transitory' view of inflation and prompt some change of course, even if just at the margin (rethinking the JGB yield cap is a likely first step, but just for clarity there has been no inkling of this from the BOJ at all as yet - but something to watch for).

The next BOJ meeting is September 21 (Wed.) & 22 (Thurs.)