2026-01-25 21:32:00
The market is warming up for the week and we already have some big moves indicated. Australia is on holiday today but the big notable change is that USD/JPY contionues to sink. The pair rose as high as 159.23 on Friday in the aftermath of the BOJ but it’s now down nearly 500 pips from that level, including 123 today.
Net change:
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Euro: 1.1864 change since Friday’s close +0.0038
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Japanese Yen: 154.48 change since Friday’s close −1.23
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British Pound: 1.3650 change since Friday’s close +0.0009
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Swiss Franc: 0.7753 change since Friday’s close−0.0048
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Canadian Dollar: 1.3700 change since Friday’s close 0.0000
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Australian Dollar: 0.6913 change since Friday’s close +0.0020
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New Zealand Dollar: 0.5958 change since Friday’s close +0.0009
Note that liquidity is still extremely thin so be careful with these numbers.
On Friday, the Bank of Japan decision wasn’t any big surprise but several reports/rumors suggest that the Federal Reserve did a rate check on USD/JPY on behalf of the BOJ/Japanese Ministry of Finance. That’s a big warning about potential intervention.
In addition, on the weekend Japan PM Sanae Takaichi warned officials stand ready to act against
“speculative and highly abnormal” market moves as the yen weakens and
bond yields rise.
Officials appear to be escalating from verbal warnings to operational
signalling, increasing intervention risk into thin-liquidity sessions and the market is taking heed. USD/JPY longs and yen shorts in general have been a popular and increasingly crowded trade over the past eight months and it looks like a race to the exits that’s continuing in early trade.
The comments from Takaichi were made during the leaders’ debates and an election is coming in February. There’s no doubt she doesn’t want markets (including the bond market) to get disorderly during the campaign so that heights the risk of intervention. At the same time, she’s campaigned on more fiscal spending and you can’t fool the bond market forever.
