Yen Nears 160 Mark, Intervention Risk Returns to Market Spotlight

【Yen Nears 160 Mark, Intervention Risk Returns to Market Spotlight】

(1) With Japan resuming trading after the holiday, yen intervention risk has once again become a market focus. After two consecutive weeks of yen declines, USD/JPY is approaching the closely watched 160 level.

(2) Strategists believe that with the yen continuing to depreciate following the Bank of Japan's September rate hike, the 160 level has again become a key test of Japan's tolerance for yen weakness.

(3) Carol Kong, currency strategist at Commonwealth Bank of Australia, said that if U.S. Treasury yields continue to rise and the market keeps testing Japan's resolve to defend the yen, USD/JPY could soon break above 160. If the exchange rate breaks through this level rapidly, the likelihood of official action would increase significantly, especially given recent reports of "rate checks" by the Bank of Japan.