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Yen Intervention Trigger May Come in 40 Year JGB Auction

ADMIN || 27th January 2026

Data suggests that Japanese authorities didn’t intervene during the swoon for USD/JPY which began last Friday, but it is likely that sustaining yen gains will need a follow-up to the Fed’s rate checking.

The central bank data showed it projects the current account will fall by ¥630 billion ($4.1 billion) due to fiscal factors on Tuesday, bigger than a drop of about ¥167 billion projected by an average of estimates by Central Tanshi, Ueda Yagi Tanshi and Tokyo Tanshi Research. The scale of the discrepancy was much narrower than the smallest intervention since 2022 of ¥729 billion. With such a small amount, it was difficult to conclude intervention had taken place.

The outcome of Wednesday’s 40-year JGB auction could be the trigger for the next wave of tough language or actual FX intervention. Although JGBs are calmer after the chaotic swings seen last week, the sale of the longest-duration tenor is still a big hurdle. Arm twisting to produce a smooth auction will be expected by investors, but that doesn’t mean that secondary trading will be mellow. Indeed, JGB futures are softening in early Tuesday action.

Should the 40-year debt sale spark another meltdown at the long-end of the JGB curve, which can be expected to trigger fresh yen selling. That’s when Japanese authorities would sit up and potentially support the yen, if they haven’t already done so.

Meanwhile, Scott Bessent and friends have shown the Japanese authorities they are fully engaged in putting a floor under the yen. That probably equates to USD/JPY settling into a range of 150-160. If it doesn’t, FX traders will be expecting stronger tactics to boost the yen.

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