From the market’s point of view, it is not interventions but a change in monetary policy that constitutes the main risk. That confirms my prejudice: without fundamentally supported reasons for a JPY recovery (i.e. in the absence of a monetary policy reversal) there will be no sustainable JPY recovery. The market seems to share my view.

On the other hand, the market does not share my view when it comes to the upside risks in USD/JPY. The major aspect I am concerned about is a different one: that the inflation expectations get out of control so that the BoJ only has a choice between high inflation and fiscal stress – with clearly negative effects for the Yen. I am clearly on my own when it comes to this underlying fear. Otherwise, JPY puts with long maturities would not be so cheap (compared with ATM).