Yen and Yuan Watch: USD/JPY and USD/CNY Daily — 2026-09-02

Top developments

Yen Slips Past 160, Erasing Intervention Gains

On August 28 and August 31, the USD/JPY pair moved past 160 per dollar, reaching its weakest level in a month and extending a slide that has erased more than half of the currency's intervention-fueled recovery. This breach underscores the yen’s vulnerability to further weakness and places traders on high alert for renewed Ministry of Finance (MOF) entry into the market to slow the decline. The failure of previous support levels suggests that fundamental interest rate differentials are overwhelming recent official efforts to stabilize the currency.

MOF Confirms Record ¥15.4 Trillion Intervention

The Ministry of Finance released data on August 28 confirming that total foreign exchange intervention operations from July 30 through August 26, 2026, amounted to ¥15.3993 trillion (approx. $96 billion at prevailing rates), marking the largest monthly intervention on record. This figure includes the unprecedented coordinated effort with the US Treasury to support the yen. Despite the massive scale, Nikkei reports indicate that the market view is that the intervention served primarily as "time-buying" rather than a structural fix, with no clear trend change toward a stronger yen observed yet.

1 sources

mof.go.jp

mof.go.jp

Goldman Sachs: Carry Trade Thriving Despite Intervention

Goldman Sachs analysts noted on August 31 that while the direct impact of the intervention on the yen's spot price appears to be fading, relative value carry strategies continue to thrive. The bank argues that the fundamental drivers of the yen's decline—specifically the wide interest rate gap between Japan and the US—remain intact. This suggests that despite the record intervention, the market is effectively using any temporary strength to rebuild short positions, keeping pressure on the currency and complicating future MOF efforts.

PBoC Keeps Yuan Fixing Narrow Amid US Rate Hike Speculation

The People's Bank of China (PBoC) set the USD/CNY central parity rate at 6.7828 on August 31, a slight depreciation of 17 basis points from the previous day. Over the past week, the fixing has remained in an extremely narrow band between 6.7810 and 6.7840, signaling the PBoC's intent to stabilize the yuan against the dollar despite rising expectations for a September Fed rate hike (odds near 60%). This tight control contrasts with the more volatile moves seen in other Asian currencies.

Local view

Japanese media outlets, including Nikkei and Gaitame.com, are focusing heavily on the sustainability of the recent intervention. Nikkei reports that the ¥15.4 trillion spent over the last month has not altered the underlying trend, with many strategists viewing the move as a tactical pause rather than a reversal. Gaitame.com notes that Tokyo traders are now warning of heightened vigilance regarding further intervention by domestic authorities if the yen continues to weaken past the 160 level.

Context & numbers

• USD/JPY Level: Broke above 160.00 on August 28-31, 2026.
• Intervention Volume: ¥15,399.3 billion (July 30 – Aug 26, 2026).
• USD/CNY Fixing: 6.7828 (Aug 31); 6.7829 (Aug 26).
• Fed Rate Hike Odds: September probability rose to ~55.7% - 60% by end of August.
• Onshore Yuan High: Strengthened to 6.7212 earlier in August, strongest since Feb 2023, before pulling back.

On the radar

• US Fed Policy Meeting: With September rate hike odds surging to nearly 60%, any hawkish signal from the Fed will likely intensify pressure on the yen and test the PBoC's willingness to defend the yuan fixing.
• MOF Verbal Intervention: Watch for statements from Japanese Chief Cabinet Secretary or Finance Minister following the breach of 160, which typically precedes actual market entry.
• CNH/Onshore Spread: Monitor the spread between offshore CNH and onshore CNY; a widening gap could indicate capital outflow pressures or PBoC tightening of offshore liquidity.