JPY flows: Another new post February USD/JPY high

USD/JPY has broken to new post-February highs at 155.30, with the USD seeing some general strength, although it is most pronounced against the JPY. EUR/JPY has stopped just short of the all time EUR/JPY high of 179.97 seen last week. There is no obvious trigger for the move, but it is clearly in line with the underlying trend. Proposals for a more aggressively expansionary fiscal package overnight from Goushi Kataoka, a government adviser, are seen by some as a reason for more JPY weakness, as he also said he didn’t see the need for higher rates until well into next year. But he added his voice to that of Finance Minister Katayama in saying excessive JPY declines were undesirable, adding that the pace of recent falls in the currency had been rapid, and urging FX intervention if necessary. Certainly, the risk of intervention has increased with the break above 155, and given that it is hard to find a real rationale for current JPY weakness, we would see a significant risk of action this week if there is no reversal.