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USD/JPY slips after US Treasury expands longer-dated bond support

The pair closed 0.9% lower just above 158.00, after the Treasury said it would at least double the size of its longer-dated bond liquidity support buybacks from September 9 to November 4.

Reported · Written up by our desk · Major Pairs

USD/JPY fell 0.9% on Wednesday, closing just above 158.00, the biggest single-session drop since early August when intervention had last been in focus, according to FXStreet. The yen’s slide came without any apparent action from Tokyo, as the episode centered instead on United States Treasury liquidity operations. FXStreet reports that the Treasury said it would at least double the size of its longer-dated bond liquidity support buyback operations, raising each operation from $2 billion to at least $4 billion. The change is set to run from September 9 through November 4. The newsletter notes the pair finished the session around its 200-day exponential moving average. It also pointed to shifts in U.S. yields tied to the same window, with the 30-year yield printing above 5.33% on August 18 before giving back close to ten basis points later in the day, while the 10-year eased toward about 4.65%.

FXStreet links the broader move to the interest-rate spread between Japan and the United States, saying intervention primarily alters the spot rate while leaving the spread. It adds that Japan’s policy rate is 1.0% versus a U.S. range of 3.5% to 3.75%, and that BoJ expectations for a September increase are now just under 80%, up from around 65% in early August.

Latest closeUSD/JPY 159.31 ▼0.1%

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