The dollar-yen exchange rate rose to 159.55 yen, recovering by more than 4 yen from the post-intervention low of 155.23 yen, indicating that the effect of the intervention is waning.
According to the Mainichi Shimbun, Governor Ueda’s press conference following the Bank of Japan’s July policy meeting was interpreted as signaling an intention to raise interest rates, and the newspaper reported that the U.S. had cooperated in the coordinated intervention; however, although the yen briefly fell to around 158.40 yen, the effect was short-lived.

U.S. Treasury Secretary Bessent has commented on this coordinated intervention between Japan and the U.S.
“The current level of the yen could trigger other problems or currency devaluations.”
“Additional measures are needed to sustain the effects of intervention.”
“I am confident that Bank of Japan Governor Ueda will take the necessary measures.”

He acknowledged that Japan’s currency and financial markets were in a critical state, and his remarks strongly suggested that the Bank of Japan would raise interest rates. Although the Takaichi administration had previously been cautious about an early rate hike, it appears to have indicated in advance that it would support Governor Ueda making hawkish remarks at the Bank of Japan’s press conference on the 31st.
The Japanese government also supports an early rate hike from the perspective of maintaining the effectiveness of coordinated currency intervention with the U.S., and interviews with multiple government officials indicate that the Bank of Japan is considering a rate hike at its Monetary Policy Meeting to be held in September or October.
If the administration—which had previously been an obstacle to rate hikes—now supports them, this would remove one barrier to yen appreciation and could be seen as a near-term positive factor for the yen.

A September rate hike by the Bank of Japan is already priced in. However, the extent of the government’s support remains unclear.
While one or two rate hikes may be acceptable, any more than that would likely draw opposition.
We will continue to closely monitor the relationship between the government and the Bank of Japan.

The market has also priced in the fact that U.S. employment conditions are weaker than expected and that Fed Governor Warsh is less hawkish than initially anticipated.
The fact that the dollar-yen pair is not falling despite this suggests that further factors encouraging yen buying will be needed.

Will we see sideways movement until next week’s Jackson Hole symposium?
If the pair approaches 160 yen, its upward momentum is likely to slow due to fears of renewed intervention, but shorting USD/JPY in anticipation of intervention might also be risky.
With the Strait of Hormuz not reopening smoothly and crude oil prices rising, I’d like to buy USD/JPY on any pullbacks.