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Intra-day USD-JPY price action which has evidenced occasional spikes higher shows the fear of intervention from the Bank of Japan. Historical data has shown that intervention usually causes a knee-jerk reaction, between2%-3% higher and then a reversal.
We are now firmly in intervention territory, and the threat is rising. The situation is very
similar to when the Japanese authorities last stepped in to the FX market in 2010 and
2011. The BoJ tends to intervene early in Asian trading (just after midnight UK time).
"Reversal depends on whether it is unilateral or multilateral intervention. Unilateral intervention is unlikely to change the trend. We believe it will be a unilateral intervention and the reversals in these cases are much faster." notes HSBC Research.
