USD/JPY

It has not been an easy week for the Japanese yen. Over the last four trading sessions, USD/JPY has posted a move of only around 0.3%, reflecting a market that continues to lack clear direction and remains trapped in a phase of neutrality.

USD/JPY remains perched above major trend support as intervention risk and Jackson Hole raise the stakes for the next directional move.

The US Dollar has extended a series of lower-lows and highs and tomorrow brings the Fed’s preferred inflation gauge of Core PCE. It still feels to be a USD/JPY market, but larger bullish themes have built in gold and BTC as a world fueled by debt doesn’t look to soon be turning towards austerity or fiscal prudence.

The dual intervention last month is fading as USD/JPY buyers get more and more aggressive, bidding dips at higher lows as we approach what could be a massive event at Jackson Hole.

USD weakness, rising CAD demand and renewed JPY shorts shape this week’s COT report ahead of Jackson Hole.

Treasury is fighting market forces just as Warsh wants them to do more of the work. The battle over who sets long-term borrowing costs could be the defining driver for USD/JPY this week.

The US Dollar set a fresh lower-low and then stalled as rate markets continue to harbor the expectation that the Fed will hike later this year. But if looking at this through USD/JPY, the matter gets a bit more complicated.

Japan CPI strengthened the case for a September BOJ hike, yet the yen remains weak as traders weigh intervention, yields and higher oil prices.

The US dollar broke support as Treasury buybacks sent long-end yields lower, dragging USD/JPY towards important downside levels.

It was a busy morning as a surprise announcement of increased Treasury buybacks sent yields down which had a reverberative effect across many macro markets, USD/JPY included.

This was a wide-ranging session that followed a support test in the S&P 500 as an ongoing theme, as climbing bond yields put the world a little more on edge.

It was a shocking sell-off and a surprising dual intervention three weeks ago. But with US inflation high and Japanese inflation low, the fundamental bias in the pair has continued to bring in bulls at higher-lows. This sets the stage for a showdown between markets and policymakers in the coming weeks.