USD-JPY broke above 162 in the morning of 30 June. The Finance Minister, Katayama, promptly said the authorities would “respond... appropriately at any time” and that "bold actions" are an "option" as confirmed in their recent meeting with the US Treasury (23 June). This is a weaker response compared to what she said on 30 April (“we are nearing [the] time to take bold action"). Also, Vice Finance Minister in charge of intervention, Mimura, has not commented yet (versus 30 April: "this is my final warning”).
We changed our broad USD view after the 17 June FOMC meeting - we now see the DXY index in a new and higher range. Accordingly, we have also raised our USD-JPY forecasts from 155 previously to 162 for end-2026 and 164 for mid-2027. Implicit in our forecasts are our assumptions that 1) no hawkish and rapid rate hikes from the BoJ (so the nominal and real US-Japan rate differentials will likely remain wide) 2) fiscal concerns remain in the market (as the Takaichi government focuses on using fiscal policy to curb cost of living, boost investments and enhance defence; 3) no change in capital flow policies for residents (so retail investors' equity outflows continue and 4) the MoF will still be resisting unfettered JPY depreciation (because of the unpopularity of a weak JPY with the Japanese public, and the risk of even more occurrences of “triple sell” in JPY, equities and bonds), but its tolerance level has likely shifted slightly.