US-Japan coordinated FX intervention will likely have a longer lasting effect compared with past unilateral interventions but it still will not be enough to reverse the trend of yen weakness. We assume a slightly stronger path for the yen in the coming months but maintain our yen forecast for year-end and in 2027.
Despite rising market speculation about faster rate hikes by the Bank of Japan, we continue to assume the central bank waits until December because the intervention reduces the risk of a sharp yen depreciation and gives the BoJ more time to assess the impact of the Middle East conflict and past rate hikes on the economy.