USD/JPY Breaches 150.00, Before Dropping Sharply Amid Intervention Speculation

Intervention speculation dominated USD/JPY sentiment post the Asia close on Monday. The pair briefly spiked above 150.00, but it was short lived. A sharp and abrupt fall in the pair off the highs has raised considerable suspicion of official intervention in the currency rate (a Japanese finance ministry official declined to comment on the matter), but markets may have to wait until the month-end BoJ intervention data release for any confirmation.

• The strong recovery off the USD/JPY lows may suggest a lack of follow through from any intervention, with spot recouping close to 175 pips off the 147.43 low. This keeps the pressure turned higher for now, and markets will be looking to test if any further breaks of 150 will be followed by an abrupt decline.
• The pair was last near 149.00, with yen up 0.56% for Tuesday's session, the only currency to rally against the USD.
• Yield momentum remained in favor of the USD (fresh cyclical highs in the US 10yr to 4.795%), as JOLTS job opening data surprised on the upside. Equity sentiment was weaker though, which may have lent some yen support on crosses. AUD/JPY is back sub 94.00.
• In the vol space, 1 week and 1 month implied vols are higher but remain sub recent highs. The 1 month risk reversal is down sharply, but at -1.3750 remains above 2023 troughs (which rest beyond -2.00).