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DXY held up despite a coordinated intervention into JPY by Japan and the US.
- US and Japanese officials warned investors they’re determined to keep defending the yen after their first joint intervention in 15 years.
- Treasury Secretary Scott Bessent publicly vowed that the US “will not hesitate” to wade back into the market, if needed, and Japanese Finance Minister Satsuki Katayama confirmed their joint campaign.
- Speculation is emerging of further joint moves, with expectations rising for the Federal Reserve and Bank of Japan to raise interest rates in September, and Japan to utilize a Fed facility to access dollars without selling Treasuries.
DXY underreacted.
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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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