Wall Street banks disagree on what last week's joint US-Japan intervention will do for the yen. JPMorgan expects a limited, largely symbolic effect and keeps its existing USD/JPY forecasts, Bank of America sees the coordinated move as a bigger shift, and MUFG calls it mainly a way to buy time.
JPMorgan, Bank of America and MUFG are reading last week's joint intervention by the United States and Japan on the yen in three different ways. There's no denying the symbolic weight of Washington stepping in alongside Tokyo, but any further action would raise political considerations and questions about the US administration's own dollar policy.
That leaves an open question: how far the US would take things if the yen keeps falling from here.
JPMorgan keeps its bearish call
JPMorgan expects the intervention's effect on supply and demand to stay limited, arguing any impact will come mainly through the announcement itself rather than sustained follow-through. According to JPMorgan: "we see a low likelihood that coordinated intervention would lead to major yen appreciation" that takes USD/JPY below 150. The bank kept its existing targets, projecting USD/JPY at 160 in Q3 2026, 164 in Q4 2026 and 164 in Q2 2027.
BofA sees a bigger shift underway
Bank of America takes the opposite view. It argues the joint action shows the authorities' commitment to defending the yen is strong and that the cost of a failed intervention is high. The bank also expects the shift to coordinated intervention to raise expectations for a broader policy framework aimed at stabilizing the yen, and says pairing with the US blurs the ceiling tied to unilateral currency intervention.
With Washington now involved, BofA argues the ultimate constraint on intervention has effectively been removed. As a result, the bank sees the market's view that FX intervention is ineffective potentially shifting, at least over the short to medium term.
MUFG says the move only buys time
MUFG expects US-backed support for the yen to stay relatively small in scale, framing the coordinated effort as a way to buy time rather than reverse a yen-weakening trend that has been in place over the last five years. It says a sustainable reversal would also need a shift in fundamentals, including more US pressure on Japan to let the Bank of Japan normalize policy faster.
Traders have already moved to price near 50:50 odds of a September rate hike from the Bank of Japan, MUFG added.
Source: Investinglive
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