Mitsubishi UFJ Morgan Stanley Securities: Unless the US hints at coordinated intervention, the dollar is expected to continue strengthening

Although there may have been intervention during Japan's early May holiday, the US dollar rebounded quickly, indicating strong upward pressure on the US dollar and downward pressure on the Japanese yen. The market generally believes that unilateral intervention by Japan has minimal effect. Simply reiterating the G7 statement will only encourage speculators to buy the US dollar and sell the Japanese yen. Since speculators can profit by selling the US dollar during intervention and buying it back after the intervention ends, intervention may actually increase speculator participation, thereby further reducing its effectiveness.