After several rounds of warning and nearly 25 big figures later in USD/JPY, Japan finally stepped up to the plate and intervened on the yen. At this juncture, 140-145 in USD/JPY seems a plausible trading range for the time being, economists at TD Securities report.

Bank of Japan opens pandora's box

“Japan finally stepped in to intervene in the currency. We have long held the view that 'yentervention' is a losing proposition. Surely the MOF/BoJ look to their peers and recognize that this has indeed been the case.

“Lost in the noise of intervention was a rather notable shift in the BoJ's stance on inflation. Specifically, they noted that there are signs of underlying inflationary pressures building. We think this is a rather notable inclusion.”

“With the likely recognition that intervention is not a feasible long-term solution, the BoJ may be gearing up for an earlier shift in YCC than widely perceived by the market. As such, October should be viewed as closer to being a live meeting in a very long time.

“For now, we think USD/JPY will attempt to carve out a range in the 140-145 area for now.”