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Yen intervention renewed, but HSBC flags a persistent rate gap

HSBC Asset Management says ongoing US inflation and a cautious Bank of Japan tightening path keep rate differentials weighing on the yen’s medium term outlook.

Reported · Written up by our desk · Major Pairs

HSBC Asset Management reviewed recent coordinated yen support by Japanese and US authorities, comparing it with a prior episode that triggered a sharp unwind of the yen carry trade two years ago.

The firm said intervention can provide near term lift, noting that short positioning risks could raise the chance of a sudden yen appreciation.

However, the report argued the current backdrop is less supportive than in 2024, pointing to persistent US inflation and the Bank of Japan’s cautious stance on signaling a faster tightening path.

In that framework, HSBC said that despite short term support and positioning risks, rate differentials remain the key factor weighing on the yen’s medium term outlook.

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