Yen and Yuan Watch: USD/JPY and USD/CNY Daily — 2026-09-08

Top developments

Yen Surges Past Intervention Peak on Carry Trade Unwind

The yen strengthened significantly this week, reaching its highest level since February and surpassing the peak achieved during the coordinated US-Japan intervention in late August. On September 8, USD/JPY traded just above 154.00 after a sharp rally that saw the pair drop from recent highs, driven by expectations of Bank of Japan tightening and a rapid liquidation of yen-funded carry trades.

This move matters for intervention watch because it reduces immediate pressure on the Ministry of Finance to intervene again, shifting focus to whether the BoJ will raise rates next week to solidify the trend. The "carry unwind" narrative is now dominant, with analysts noting that the repricing of funding costs has triggered a faster-than-expected exit from leveraged positions.

PBoC Sets Yuan Fix Weaker Than Estimates to Curb Gains

The People's Bank of China (PBoC) set the USD/CNY central reference rate for Tuesday at 6.7804, weaker than the prior day's fixing of 6.7795 and significantly weaker than the Reuters estimate of 6.7104. This decision comes as the yuan had climbed to its strongest level against the dollar in over three years, breaching the 6.72 mark earlier in the week.

By setting the fix weaker than expected, Beijing is signaling a preference for stability over rapid appreciation, aiming to protect exporters who have faced headwinds from a stronger currency. This contrasts with the yen's free-fall in value (or rise in strength), highlighting divergent policy responses: Tokyo allowing market forces to drive appreciation via carry unwind, while Beijing actively managing the pace of yuan strength through the daily fixing mechanism.

US Treasury Secretary Signals Support for Stronger Yen

US Treasury Secretary Scott Bessent stated on Monday that he believed Japanese authorities would take action to lead to a stronger yen, reinforcing the perception that Washington tolerates or even welcomes the current appreciation trend. This commentary aligns with the recent coordinated intervention efforts and suggests continued diplomatic alignment between the US and Japan on currency issues.

For USD/JPY traders, this political backdrop reduces the risk of sudden US-led opposition to Japan's monetary tightening, potentially emboldening the BoJ to act more aggressively on interest rates. The statement serves as a green light for the ongoing carry trade unwind, as investors interpret US silence or support as permission for the yen to continue its rally.

Local view

Nikkei reported that the yen's rapid ascent to the 155 yen range was the most significant daily gain in months, with market participants citing both the BoJ rate hike expectations and the unwinding of speculative short positions. The outlet highlighted that while the intervention gains from August were initially eroded, the new momentum is fundamentally driven by yield differentials rather than direct market intervention.

Nomura Securities analysts noted that the USD/JPY break below 155 was a key technical trigger, with many institutional investors adjusting their year-end forecasts. Nomura raised their end-of-year USD/JPY forecast to 152.5 yen, citing the persistent strength of the dollar due to Middle East tensions but acknowledging the yen's structural recovery driven by domestic policy shifts.

Context & numbers

• USD/JPY: Traded near 154.00 on September 8, down from highs above 160 in late August. The pair has broken below the 155 "trigger" level identified by major banks like Bank of America.
• USD/CNY: The daily fixing was set at 6.7804 on September 8. The offshore yuan (CNH) traded in a tight range of 6.7059 to 6.7124 during Asian hours.
• Policy Divergence: The BoJ is widely expected to hike rates next week, while the PBoC maintains a cautious stance, using the fixing to guide the yuan rather than relying solely on market forces.

On the radar

• BoJ Meeting Next Week: The primary catalyst for USD/JPY remains the upcoming Bank of Japan policy decision. A hawkish surprise or explicit guidance on further hikes could push the yen toward 150.
• PBoC Fixing Guidance: Watch for the daily USD/CNY reference rate. If the PBoC continues to set the fix weaker than market consensus, it may cap yuan upside and encourage USD/CNH buying.
• Carry Trade Positioning: Monitor CFTC positioning data for signs of further carry trade liquidation. FXStreet notes that while prices have moved, the actual "unwind" of positions may still be in early stages, suggesting potential for further volatility.