It may be a quieter start to the new week but this is one to watch where the action can pick up quickly. After having intervened in late April, Japanese officials are being put into the spotlight again now. Are they going to step in at the 160.00 mark once more? Or are they going to relax the threshold for yen-tervention like previous times during the last two years?
The thing about the latter is that Japan has failed to convince markets of a changing narrative in the fundamentals.
Sure, the BOJ has finally ended its negative interest rate policy experiment. But the promise was for so much more than that. Yen bulls were already largely disappointed by Ueda's lack of boldness in 2023 and that seems to be spilling over to 2024 as well.
With inflation pressures easing, that is making it tough for the BOJ to convince of tightening policy much further - at least for now. Things may still turn around later in the year but essentially, policymakers are banking on hope for a change.
And until that really shows up, the pressure on the yen doesn't look like it will ease up.
So, the ball is now thrown back to the MOF/BOJ's court. Intervene again at 160 or let it rip to the next threshold?
