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.
