Yen and Yuan Watch: USD/JPY and USD/CNY Daily — 2026-09-10

The yen surged to its highest level since February, surpassing the peak reached after the August coordinated intervention, as traders bet on Bank of Japan rate hikes. Meanwhile, the PBoC set the yuan fixing weaker than expected to curb rapid gains, while offshore CNH briefly hit multi-year lows before rebounding.

Yen Surges Past Intervention Highs as PBoC Slows Yuan Gains

Top developments

Yen Hits Highest Since February, Tops Intervention Rally

On September 7, the yen strengthened to its highest level since February, surpassing the peak reached after the coordinated intervention by Japan and the US in late August. This move occurred despite Bank of Japan accounts showing no sign of major intervention on September 3, suggesting the rally was driven by trader recalibration of rate hike expectations rather than direct MOF action. The sustained strength above previous intervention levels signals that market participants are pricing in a more hawkish BoJ stance, reducing the immediate need for further Ministry of Finance intervention while increasing pressure on carry-trade positions.

PBoC Sets Weaker-Than-Expected Fixing to Curb Yuan Gains

The People's Bank of China (PBoC) set the USD/CNY central reference rate for Tuesday (September 8) at 6.7804, weaker than the Reuters estimate of 6.7104 and the prior day’s fixing of 6.7795. This "weaker-than-expected" fixing was interpreted by analysts as a deliberate signal to slow the pace of yuan appreciation, which had seen USD/CNH briefly fall to its lowest level since February 2023. By nudging the daily reference rate higher, Beijing is managing export competitiveness concerns and preventing excessive volatility in the offshore market.

Yuan Steps Into Carry Trade Spotlight as Yen Surges

As the yen’s rapid appreciation makes it a riskier funding currency, strategists note that the Chinese yuan is gaining renewed attention as an alternative for carry trades. Investors are reassessing funding legs, with some shifting from yen-funded positions to those using other low-yield currencies or adjusting leverage due to the yen's volatility. This shift highlights the interconnectedness of Asian FX markets, where policy divergence between the BoJ and PBoC is creating new arbitrage opportunities and risks for global portfolios.

Carry Trade Unwind Accelerates, Hitting Equities

The yen's rally has intensified fears of a broader carry trade unwind, with DBS Group Research noting the yen has become the best-performing currency in the DXY basket in 2026. While positioning data suggested the massive unwind hadn't fully materialized by early September, the repricing of funding costs is already impacting equity markets and global asset allocations. The "unwinding faster than expected" narrative is pushing USD/JPY forecasts lower, with some strategists targeting 149 if BoJ tightening bets persist.

Local view

Japanese media reports that the dollar-yen rate briefly fell into the 154-yen range on September 7, marking the first time since late February that the yen exceeded the strength seen during recent interventions. Nikkei notes that vigilance against yen volatility now exceeds concerns about intervention itself, as markets struggle to read both US and Japanese monetary policy paths. In China, local financial outlets highlight that the PBoC's "weaker middle price" strategy is effectively limiting the speed of yuan appreciation against the dollar, balancing export needs against capital flow stability.

Context & numbers

• USD/JPY: Traded just above 154.00 on September 7, giving up close to two yen from recent highs.
• USD/CNH: Briefly fell to its lowest level since February 2023 before rebounding; today's range is cited between 6.7059 and 6.7124,.
• Intervention History: Japan spent a record 15.4 trillion yen ($98 billion) to boost the yen between July 30 and August 2026.
• PBoC Fixing: The USD/CNY reference rate was set at 6.7804 on Sept 8, compared to a Reuters estimate of 6.7104.

On the radar

• BoJ Policy Signals: Markets are watching for further confirmation of rate hike expectations from the Bank of Japan, which drove the recent rally without explicit intervention.
• Carry Trade Positioning: Monitor whether the "unwind" narrative leads to actual liquidation of long-yen/short-high-yield positions, particularly in equity markets.
• PBoC Guidance: Watch for continued use of the daily fixing mechanism to manage the pace of yuan appreciation, especially as CNH tests multi-year lows.