USD/JPY is “only” around 1.5% stronger than it was at its peak just shy of 146.00 on 22 Sep when intervention started. Economists at Credit Suisse expect the pair to move above 150.

Bank of Japan steps up intervention pace in October 

“Data from Japan’s MOF released on 31 Oct showed that Japan spent around JPY 6.3 trillion ($42.4bio) on FX intervention in October, compared to JPY 2.8 trillion ($19.0bio) in September. Our view has consistently been that such a strategy cannot generate persistent JPY strength and could also prove both costly in terms of reserves drawdown and require a longer period of intervention than Japan ideally wants. But for now, our long-held USD/JPY 150.00 target still seems appropriate.”

“Japanese media suggests the main umbrella union Rengo will ask for wage hikes of 5% next year, up from the 4% level it wanted for this year (2% was actually achieved). With longer-term inflation expectations rising too, it seems Kuroda still sees this as a unique opportunity to reset Japan’s inflation mindset and is unwilling to let go. We suspect that over time this will cause USD/JPY to trade above 150.00 sustainably, and we think dips in USD/JPY to recent lows around 145.25 offer good entry points for longer-term players.”