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USD/JPY loses 500 pips amid Japanese intervention

Japan stepped in to support the yen for the first time since 1998, in an attempt to stem a 20% decline against the dollar this year amid a growing policy divergence with the United States. The yen rose 2.3% against the dollar, retreating sharply from today’s lows when it broke through the key psychological level at 145, where senior currency official Masato Kanda said the government is taking “bold action”. The intervention came after the Bank of Japan insisted that it will maintain its negative interest rate policy even as the Fed raises rates aggressively, and points to how the pain threshold was reached as hedge funds continued to increase short bets on the yen.
Just as the Fed decided to prepare for a recession in order to contain inflation
The US stock indices had risen, reaching the future contract of the Dow Jones Industrial Average to the psychological level of 31,000, and the dollar also declined against gold, which reached 1687 dollars per ounce, after verifying this expected decision by nearly 100%, which came unanimously by the members of the committee.

However, all of this came back to be reflected with the speech of Federal Reserve Chairman Jerome Powell, who made it clear that the Fed is ready to accept more deflationary pressures on the economy and a greater rise in the unemployment rate in order to contain inflation.

Economic growth will be below its normal rates in the medium term in the coming period, and pressures will increase on the labor market due to inflation and the efforts made to contain it, but he avoided calling this a recession or fabricating a recession by disrupting economic activity in order to contain inflation. His previous talk from Jackson Hole.
Powell’s speech also clearly showed that the Fed began to see that there is a conflict between the inflation target on its part and the volume of demand witnessed by the American economy, which still supports its growth at these high levels of prices, which led to the rise of inflation to its highest levels in 40 years.

This is a matter that worries the Federal Reserve, which is currently raising the interest rate at relatively high rates to meet this inflation, even if this interview was delayed at first, due to the Fed’s labeling of the rise in inflation even before the beginning of this year as “temporary and temporary” and he attributes it as he attributes it until now to the lack of supply chains that Naturally exacerbated the cause of the Ukrainian crisis and its consequences for the prices of raw materials and energy.

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