JPY: 150 the new line in the sand in USD/JPY?

USD/JPY breached the 149 level without triggering any BoJ intervention. Verbal
intervention has ramped up, however, with Finance Minister Shun’ichi Suzuki
saying policymakers cannot tolerate excessive currency moves. On our verbal
intervention scale, Suzuki’s rhetoric has heightened the warning to traders from 6
to 7 and is cautioning of imminent intervention; we think 150 is the new line in the
sand. Traders have noted the MoF’s tolerance for a grind higher in USD/JPY as it
has avoided the JPY2-3 moves per day BoJ Governor Haruhiko Kuroda defined
as excessive. But, every JPY5 appears to be offering new levels of MoF resistance
to further depreciation. The 150 in USD/JPY is also a very important psychological
level. USD/JPY has traded a 75-150 range for over thirty years. The public would
pay significant attention to a break of 150 by USD/JPY and call on politicians to do
something about the weak JPY. And, given the large technical importance of
USD/JPY breaking the 75-150 range, the break would be followed by higher levels
of volatility the MoF would not tolerate.

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