Mitsubishi UFJ: The effect of US-Japan joint intervention is short-lived, with the renewed attractiveness of arbitrage trading potentially suppressing demand for yen purchases.

(1) Mitsubishi UFJ pointed out that the joint currency intervention conducted by the US and Japan has not had a lasting effect, with the USD/JPY exchange rate this week rebounding above 159. (2) After the yen experienced a significant appreciation, market participants remain relatively subdued in their willingness to buy yen in the short term; some retail margin traders who previously shorted the yen may resume selling yen after the exchange rate rebounds. (3) Although the short yen positions may have been closed out, the appeal of returning to arbitrage strategies (rather than directional bets) may increase again at the current lower exchange rate levels, thereby encouraging renewed buying of USD/JPY.