Debasement, reserve status, and where the currency everyone prices in goes next.
The count, last 30 days: 9 bull, 11 bear. The tape leans bear. A count, not a verdict.
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What the people who move markets are saying about this, in their own
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Bearleaning · 2026-08-05
Skeptical Bessent can engineer a stronger yen with anemic US FX reserves; he wants to circle a lot of squares, it's not happening.
I think that you know it's a bit of fear mongering on the part of Besant to suggest that the wide Asian currencies could weaken on the back of the yen. What has been happening in Asia is completely different.
Intervention alone cannot rescue the yen without BOJ tightening; USDJPY never broke 155.
Until they do so, it's very much a one-sided situation where you've got currency intervention, but no change in monetary policy. Until the two come together, you're not going to get a sustained gain in the Japanese currency.
After the first joint US-Japan intervention in ~15 years (est $53bn+$34bn); FIMA repo removes the reserve limit. EVENT: will/fail test at 155.
I think this time the authorities are determined to really break 155, the key level. If they fail this time to break that level, then I think the market will see the authorities have exhausted policy options.
Defends BofA's low-150s year-end USDJPY target on improving balance of payments. EVENT: will, dated year-end.
Well, my argument, so we changed our bearish yen view in May to a constructive one. And our argument is that, you know, the balance of payment has been improving, you know, quite a lot for Japan, for the Japanese yen over the past year.
Year-end USDJPY ~155, no return to 164; cites FIMA repo firepower behind the intervention. EVENT: will/wont, dated.
I think we could easily end up in the year around 155 on the dollar yen seems like a reasonable target. I don't think we're going to go back to the 164.
Intervention slows the bleed rather than turning the trend.
So I think against this big backdrop of a macro perspective, the FX policy strategy maybe is more about so slowing the pace of yen depreciation rather than really seeking to turn it around with directional perspective.
Dollar-yen has just topped 163, a fresh four-decade low. Cranfield says intervention only knocks dollar-yen down by a couple of big figures and the BoJ is well behind the curve: 'Everything is very skewed towards the yen remaining a weak currency' @8:02; 'So if we're repeating the 1980s, there's a very long way to go' @8:45.
“And unless they can persuade the Japanese pension funds to move large amounts of money back home, the yen will stay undervalued and it will be something that traders don't fear.”
Yen above 163, weakest since 1986. He cites Japan's shift to reinvesting FDI income abroad and the oil-import bill, plus 'there is a window here of complete complacency on the market to pile in on yen shorts, especially if you're getting paid in carry, unless Japan does something on intervention' @29:05.
“So on a structural basis, Japan has a flow kind of problem going against it, versus this carry trade that is now building. Every other currency that exports oil is starting to trade a lot better than the yen.”
He cites foreigners no longer dumping Korean equities, a BOK 'a little bit more strident that they are going to be embarking on a rate hike cycle' @29:55, government messaging for a stronger won, and a cheap-export boom offsetting energy imports.
“And it really does set up for some Korean won strength here. Korean won versus yen cross has gone up to the top end of its range. And it looks like it might break up.”
Asked whether intervention at 163 would be wasted, he answers 'Pretty much so. I mean, the tools that they have at their disposal right now are just going to put a few scratches on the due code. But the car is going to keep on rolling' @84:57; dollar strength backed by oil, yields and a hawkish Fed.
“So that's a set up which leaves the yen facing sustained declines about all they can do is try and slow it down, try and keep the declines measured and avoid a too rapid shift.”
In the same clip he says Treasury is tracking the Ayatollah's $100 million-plus properties and IRGC accounts worldwide and 'We froze a crypto wallet linked to the IRGC the other day, about $130 million' @0:18.
“Their currency has collapsed. It is at an all-time low versus the dollar. It's in free fall. And we think the inflation rate is upwards of 180 percent.”
Immediately follows his gilt-negative fiscal read; his point is that sterling is insulated from the fiscal angst hitting gilts because of its high carry.
“I think from an FX perspective, the pound doesn't really care too much. I think the high carry is more important.”
Adam Linton · Bloomberg Markets Live team; name per whisper outro, verify spelling · Bloomberg ↗
Bhardwaj says the 'dollar smile' now looks like a 'smirk': despite resilient US growth and the Fed expected to hike soon, the 'hedge dollar trade' (foreigners buying US equities/Treasuries but hedging out dollar exposure) caps any rally; AI equity inflows have skyrocketed while the dollar barely bumps.
“the dollar is strengthening but really struggling to rally here. Any dollar move higher meets with a clear ceiling here because the dollar now needs a lot more boost”
…dollar is still again going back to some of the real money positioning data we have. It's still under owned. I think specs the price action last week after payrolls especially shows you spec money was probably long of dollars to a pretty extreme degree because that was not that bad of a payroll report and the dollar got crushed on the day. So that kind of tells you the point of paying short term was the positions were overweight. But that's not the case with longer term focused investors. They're still really underweight. And so I think the path of least resistance right now is that the U.S. labor market as they say it looks absolutely fine. U.S. consumption looks pretty good. Inflation is coming down. So you have this potential real income boost if the labor market stays relatively healthy that I think carries the U.S. in good stead relative to the rest of the world. So I think it's a continued short term short to medium term growing higher for the dollar. Is that Tim good morning. Is that dollar strength another tailwind for European equities as we look at that rotation. Yeah I think it can be. You know it's certainly on a relative basis they've underperformed the U.S. over the last couple of months. And I think that that can potentially help when you get a weaker currency against the dollar and being so sensitive to it. Yeah. And in terms of the rotation then where do we look in Europe to benefit from that. I mean part of the rotation maybe is into Europe and away from some of the U.S. and heavily played tech names in Asia. So maybe Europe just as a whole continues to benefit. We saw that a bit last week . Is it banks. Is it more cyclicals. What do we what do we think. The cyclical story I 'm a little less confident on just on kind of the dynamics with energy prices lately and…From: this video · 4 claims mined from it
…strengthen from really some very weak levels. It is one of the most undervalued currencies in our metrics. I think it's quite the contrast between the strength in the equity markets and the weakness of the one. I think it's not dissimilar to some extent to what is happening with the yen. I think the one has been trading more and more like the yen over the years and I think that that feature of it is probably not going away anytime soon. But in the short term I think some of these flows should be more supportive for the one and it has been trading on a better footing over the last couple of weeks already. 1.62 dollar yen this morning. 1.65 coming. How quickly do we get from A to B. Our forecast is that it's going to take a while to get there. We have it in you know about 12 months 1.65. So you know there is there's some time and I think part of that is if it was just up to the macro influences it was just up to you know freely what is going on the impulses in global markets. I think you'd get there quicker. We do have to take into account that periodically you're going to see pushback from the Japanese policy authorities you're going to see interventions. What does that do. In my view what it does is it resets the level every time they do the intervention. It kind of dampens volatility but it doesn't change the broader trends. You get there as if the macro conditions persist if we have no recession risk if the Japanese policy authorities are not super hawkish. But I think it's going to take a while.…From: this video · 4 claims mined from it