intervention

The Japanese yen fell below the 160 mark against the US dollar for the first time since September, weakening for the third consecutive trading day. The US-Japan interest rate differential exceeded 250 basis points, increasing the pressure on the yen to depreciate.Jun Mimura, an official from Japan's Ministry of Finance, stated that the recent fluctuations in the yen's exchange rate have been "too rapid," and mentioned previous interventions in the foreign exchange market. Japan intervened in the foreign exchange market three times this summer, utilizing a total of 15.4 trillion yen (approximately 96.4 billion US dollars).

According to Jinshi reports, Moon Pursuit Capital founder and managing partner Utkarsh Ahuja stated that persistently high inflation may limit the Federal Reserve's ability to provide monetary policy support, even as technology stocks weaken. He pointed out that recent comments from San Francisco Fed President Mary Daly regarding the possibility of further interest rate hikes in the future remind investors not to take for granted that the Federal Reserve will step in to support the market soon.Ahuja mentioned that for capital-intensive AI projects, even if market demand meets expectations, higher financing costs and longer approval cycles may reduce project returns. He also added that for companies with existing projects that have not yet generated cash flow but need to raise new funds, they face not only project execution risks but also uncertainties regarding future financing conditions.

Japan has stated that it intervened in the foreign exchange market three times this summer to support the yen, including a joint action with the United States. Data released by the Japanese Ministry of Finance shows that on July 30, the amount of yen purchased reached 7.98 trillion yen (approximately 50.4 billion USD), followed by purchases of 5.55 trillion yen and 1.87 trillion yen in the following days.

Chinese artificial intelligence company DeepSeek has announced a design plan aimed at enhancing the autonomy of AI coding assistants, allowing them to reduce human intervention while performing multiple tasks. According to a report by the South China Morning Post on Sunday, the plan originates from a paper published by the DeepSeek Harness team, with the core goal of reducing the human effort required to coordinate and monitor multiple AI agents.The team pointed out that managing multiple agents consumes human attention and cited a statement from the paper that "the single-task limit depends on model capability, while the multi-task limit depends on human attention." The paper also stated that one person can only supervise 3 to 5 active AI agent conversations at the same time. The proposed system will allocate tasks and coordinate work among the agents, allowing humans to free up energy to review results and make decisions.This proposal comes at a time of intense competition among AI developers, involving American companies Anthropic and OpenAI. Previously, Cointelegraph reported in October last year that, according to data from blockchain analysis platform CoinGlass, Chinese AI models outperformed their American counterparts in cryptocurrency trading, with DeepSeek being the only AI model in an experiment to achieve a 9.1% positive unrealized return, while the development cost of this model was only a small fraction of that of its American competitors.

U.S. Democratic Senator Elizabeth Warren questioned Treasury Secretary Scott Bansen about the Treasury's intervention measures in the U.S. Treasury bond market. Warren requested clarification on how funding for Treasury bond repurchases is provided by reducing cash balances and inquired about the impact of rising long-term U.S. Treasury yields on consumer financing costs.

As Japan ends its holiday, the risk of yen intervention has once again become the focus. The yen has fallen for two consecutive weeks, approaching the 160 mark. Strategists believe that the 160 mark will once again test Japan's tolerance for yen depreciation.Strategists at the Commonwealth Bank of Australia stated that if the USD/JPY breaks above 160, it will increase the likelihood of official intervention, especially considering that Japan has recently conducted a currency check.

Former senior officials of the Bank of Japan warned that U.S. Treasury Secretary Janet Yellen's "unusual" intervention in Japan's monetary affairs could undermine the credibility of the Bank of Japan and trigger greater volatility in global markets.Markets expect the Bank of Japan to raise interest rates by 25 basis points at next week's meeting. Yellen claimed to have insider information about the intentions of the Bank of Japan, and Finance Minister Shunichi Suzuki stated that her remarks were "a bit frightening."

A Reuters survey shows that most economists believe the Bank of Japan will take action faster than previously expected, and will raise interest rates again in September, with the terminal rate potentially being higher. 57% of economists expect an interest rate hike next month, a significant increase from 5% in July. Ayako Fujita, Chief Economist for Japan at JPMorgan, stated that delaying the rate hike could lead to market turmoil. In addition, more than two-thirds of respondents believe that the recent US-Japan joint foreign exchange intervention has had limited effects.

Former senior foreign exchange diplomat from Japan, Mitsuhiro Furusawa, stated that the yen is currently too weak, which may lead to a joint intervention in the foreign exchange market by Japan and the United States again.He expects the Bank of Japan to raise interest rates in September and to raise them again in December or January next year, with a target rate of 1.5% to 1.75%.

Nomura Securities stated that the scale of the intervention by the Japanese Ministry of Finance may exceed the levels seen from late April to early May, with an estimated intervention scale of approximately 14.1 trillion yen (equivalent to 88 billion USD) during the period from July 30 to August 3, surpassing the total intervention amount of 11.7349 trillion yen on April 30, May 4, and May 6.

Retail investors in South Korea are shifting their focus from the growth story of asset management companies to market stability issues in the eyes of regulators, surrounding high-leverage trading of Samsung Electronics and SK Hynix.Since their debut on May 27, the first batch of single-stock leveraged products in South Korea has quickly become one of the most crowded trades in the current semiconductor rally of the Korean stock market. Sixteen single-stock ETFs and two ETNs designed around Samsung Electronics and SK Hynix allow investors to make directional bets of about 2 times on a single stock. The launch of these products coincided with the warming of the AI storage cycle, leading to a surge of retail funds into the market, pushing the total assets of the Korean ETF market to a historical high at one point.Winners on the fee side quickly emerged. Estimated by net asset size and fee rates, these single-stock leveraged ETFs generated nearly 3.7 billion won in management fees after about two months of operation. Samsung Asset Management took the lion's share due to the scale advantage and higher fee rates of its KODEX products, while Future Asset offered lower fees to gain market share. Early data from Korean media has shown that Samsung and Future Asset together account for over 90% of the net assets of such products, with liquidity further concentrating on leading products.However, this fee feast has also come with significant side effects. In mid-July, the South Korean Financial Services Commission stated that the market value and trading volume of single-stock leveraged products rose rapidly after their launch, with the weight of Samsung Electronics and SK Hynix in KOSPI once reaching 52%. Regulators also pointed out that the volatility of global storage stocks has significantly increased, and the high volatility of individual stocks like SK Hynix and Samsung Electronics, combined with product rebalancing trades, could amplify market shocks.Subsequently, South Korean authorities accelerated the tightening of regulations. Starting from July 31, the minimum margin requirement for individual investors investing in such products was raised from 10 million won to 30 million won, and cash was required to meet this requirement, with alternative securities no longer accepted; regulators also suspended the launch of related new products, restricted advertising, and strengthened spread management and investor education.There are signs that trading enthusiasm has cooled. Data from the Korean Exchange shows that after the introduction of new regulations, the daily trading volume of the 16 related single-stock leveraged/inverse ETFs dropped from about 10 to 12 trillion won (peaking at 15 to 20 trillion won) to around 1 trillion won (on August 3-4), and on August 5, it fell to as low as 919.8 billion won (first time below 1 trillion). There has been a slight rebound recently, with the trading volume of the 16 related ETFs at about 7.45 trillion won on July 27.

According to Jinshi, trillions of funds are used to "rescue the yen," and a joint action for USD/JPY exchange rate intervention has been launched, aimed at stabilizing the yen exchange rate and preventing further depreciation.

According to Jinshi, former Bank of Japan committee member Atsushi Takeuchi stated that if there are signs of the yen weakening again, Japan and the United States will "definitely" take joint intervention actions once more. He pointed out that this joint action between the U.S. and Japan was highly effective, and the market has reached a consensus that the yen will not continue to weaken unilaterally.Takeuchi expects that the Japan-U.S. exchange rate may fluctuate in the range of 155 to 162 in the short term.

According to Jinshi reports, Evercore ISI stated that the long-term use of the Federal Reserve's foreign and international monetary authorities repurchase tool may prompt the market to test the determination of the United States and Japan to maintain the yen exchange rate. This tool allows overseas institutions to obtain dollars using U.S. Treasury bonds they hold as collateral, with a daily limit of $60 billion for each counterparty.Evercore strategists pointed out that this limit is only slightly higher than the scale Japan used for currency market intervention last Thursday, emphasizing that the tool is designed for short-term liquidity support rather than a lasting source of financing.

According to Jinshi reports, on Monday, the dollar continued its downward trend due to joint intervention in the foreign exchange market by the U.S. and Japan, which supported the yen. Francesco Pesole, a foreign exchange strategist at ING, stated that the market's doubts about the new Federal Reserve Chairman Walsh's ability to combat inflation are the root cause of the dollar's weakness. He pointed out that many traders are considering establishing long-term short positions on the dollar, but believe that Japan's intervention is only a temporary measure, and the true determinant of the dollar's trend will still be the Federal Reserve's policy.Jefferies strategist Mohit Kumar stated that the pressure for interest rate hikes from the Federal Reserve will continue to increase.

According to Jinshi reports, Trump stated that U.S.-Iran negotiations will start on August 3, and there is already an agreement regarding the Strait of Hormuz. He believes that reaching an agreement with Iran is better than military strikes and has decided to take punitive measures regarding the Canadian wildfire issue. In addition, Trump acknowledged that the U.S. is helping Japan boost the yen and mentioned the Pearl Harbor incident.Israeli officials stated that they were excluded from decision-making information before the U.S. canceled its strike plans against Iran.

Arthur Hayes posted on the X platform that attention should be paid to this week's Federal Reserve H.4.1 report to confirm whether the Japanese Ministry of Finance will use its U.S. Treasury bonds for repurchase in exchange for dollars, and then sell dollars to buy yen. If Bessent can increase the counterparty limit, the Federal Reserve can create money using the U.S. Treasury bonds held by the Japanese Ministry of Finance as collateral.Previously, U.S. Treasury Secretary Scott Bessent stated that both the U.S. and Japan have taken coordinated foreign exchange actions to address the "disorderly fluctuations" in the yen market.

According to Jinshi reports, the Japanese Ministry of Finance coordinated a yen buying intervention with the United States last Friday, with both parties jointly purchasing yen.