The Abe administration will not be happy with any further falloff in Japanese stocks or the USD/JPY ahead of the Upper House election on 21 July. Any significant drop in TOPIX below 1,000 and the USD/JPY below ¥95 would adversely affect market sentiment regarding the long-term outlook for the previous equity rally and yen decline, which could damage faith in Abenomics itself. The announcement on 7 June by the Government Pension Investment Fund (GPIF) regarding the change in its asset allocation target could be seen as a form of verbal intervention.
Read the full report: FX Daily
Deutsche Bank