Two conditions preceded every Japanese intervention since 2022, and both are absent today: is Trump's concern enough for a third round?

Executive Summary

• Japanese Finance Minister Satsuki Katayama said on 25 September that US President Donald Trump voiced concern about the weak yen during his summit with Prime Minister Sanae Takaichi, and that Takaichi replied that an undervalued yen is a problem. The Japanese government rarely discloses in public what passes in leaders' talks, and this comes eight weeks after the two countries' coordinated intervention on 31 July.
• Japan has spent 27,134.2 billion yen this year buying its currency in two rounds: 11,734.9 billion in April and May, and 15,399.3 billion between 30 July and 26 August. That is the largest annual outlay on yen purchases in the Ministry of Finance's published record since 1991. The next intervention, if it comes, would be the third round this year, not the second.
• We reviewed the six yen-buying interventions Japan has carried out since 2022 and found two conditions present in all of them without exception. First, the dollar was at its highest close in 12 months, or less than 0.31% below it. Second, both groups were betting on a weaker yen: Leveraged Money, mainly hedge funds, and Asset Managers, long-term funds managing others' money. Today both conditions are absent: the dollar is 3.05% below its high, and both groups are on the buying side of the yen in the latest report, the first above 72% of its readings since 2006 and the second above 85%.
• Two conditions, by contrast, have shifted in favour of intervention. The dollar has risen 2.86% in ten sessions, a faster move than preceded either of the 2026 rounds. And US cover is now public at the highest level. But the record does not make speed a condition: four of the six interventions came after a move of no more than 1% in ten sessions.
• The common headline says the yen is back where it was before the intervention; the data say otherwise. The last close at 158.84 is 4.55 yen below the 29 July close of 163.391, and the dollar has not closed above 160.167 since that day. What the yen actually lost were the gains built on the September rate-hike bet; the effect of the intervention itself remains in place.
• The reserves available for intervention are still large, but they have shrunk. Foreign currency reserves fell to $995.0 billion at the end of August, the first reading below one trillion dollars since June 2010. Almost the entire decline came from securities holdings.
• Bottom line: the political conditions for intervention are complete, while the market conditions that accompanied every past intervention are absent. On the record alone, the third round is more likely to be preceded by a return to the 163 high, a build-up of new short positions on the yen, or both. The record does not rule out an intervention before that, but it has not recorded a single case of one.