Yen and Yuan Watch: USD/JPY and USD/CNY Daily — 2026-09-05

Top developments

Yen Surges on Carry Trade Unwind and Intervention Speculation

On September 4, the yen jumped to a one-month intraday high against the dollar as investors rushed to unwind yen-funded carry trades, driven by growing bets on further Bank of Japan interest-rate hikes. This move was supported by comments from U.S. Treasury Secretary Scott Bessent, who told CNBC on Monday that he believed Japanese authorities would take further action to strengthen the currency. The surge marks a sharp reversal from late August, when the yen had weakened past ¥160 per dollar, eroding gains from earlier joint US-Japan interventions.

Hedge Funds Unwind Yen Shorts

Hedge funds have begun significantly unwinding bearish yen positions, putting pressure on one of the market’s most established carry trades. This shift reflects a broader reassessment of the risk-reward profile of shorting the yen, as rising Japanese government bond yields and the stronger currency revive concerns about potential mass liquidations. While Goldman Sachs notes that relative value carry strategies may still thrive in certain niches, the directional short-yen trade is losing momentum.

PBOC Signals Caution on Yuan Strength

China’s central bank (PBOC) has moved to slow the yuan’s gains by setting a weaker-than-expected daily reference rate, signaling discomfort with the currency’s recent strength. Although this specific fixing was from August 20, the stance remains relevant as the yuan had climbed to its strongest level against the dollar in over three years. Recent estimates suggest the PBOC is setting the USD/CNY reference rate around 6.7098, maintaining a controlled appreciation pace.

Local view

Japanese media outlets like Nikkei are closely tracking the "post-intervention" phase, noting that while the yen has approached highs seen after the initial intervention, traders are preparing for further upside. Reports indicate that despite the sharp move on September 3-4, Bank of Japan data released on September 3 showed no clear trace of direct intervention on September 2, suggesting the rally was market-driven rather than official. Nomura Securities analysts highlight that the sustainability of intervention effects is now a key focus, with attention shifting to whether the BoJ will accelerate rate hikes to support the currency.

Context & numbers

• USD/JPY: The pair dropped sharply in early September, moving from above ¥160 in late August to levels not seen in a month. On August 29, the rate was approximately ¥160.07.
• USD/CNY & CNH: The offshore yuan (CNH) traded in a range of approximately 6.7199 to 6.7317 recently. The PBOC's indicative reference rate is estimated around 6.7098.
• Intervention Data: The Ministry of Finance released data covering July 30 to August 26, confirming the scale of the earlier joint US-Japan intervention efforts.

On the radar

• Bank of Japan Decision: Traders are positioning for the upcoming BoJ rate decision, which is expected to be a major catalyst for further volatility in USD/JPY.
• Intervention Confirmation: Markets remain sensitive to any official confirmation or denial of new intervention actions from Tokyo or Washington, especially after recent verbal guidance from U.S. Treasury officials.
• CNY Reflation Risks: Analysts at BNY are watching for underheld positions in the Chinese yuan to unwind as reflation risks emerge, though weak domestic growth continues to reinforce easing expectations.