Critical data awaited for intervention in yen

There are comments that Japan should not intervene in the depreciating yen before the critical core PCE data to be released in the US on Friday. The core PCE data, the inflation indicator monitored by the Fed, to be released in the US on Friday, will be of critical importance for the Japanese yen as well as all global markets. The pressure on the Japanese yen continued throughout the week when the dollar/yen exchange rate approached the critical 160 level. This increased the pressure on Japanese authorities to intervene. However, market players assess that any step taken before the PCE data is released would be premature, as it will determine the outlook for US interest rates and therefore the yen. Following interventions in April-May, Japanese authorities have tried to respond to this week’s losses with verbal interventions. Takafumi Onodera, sales and trading manager at Mitsubishi UFJ Trust & Banking Corp. in New York, said, “Japanese authorities will at least wait for Friday’s PCE to make an intervention decision, even if the dollar/yen exceeds 160 before then.” “Stronger-than-expected data could increase volatility and send the exchange rate surging toward 163,” Onodera said, adding that this could “encourage authorities to intervene as they did last time.”