"There are three key points regarding the coordinated U.S.-Japan intervention. Strong commitment and high cost of failure First, the joint intervention implies the authorities' commitment to defending the yen is strong and that the cost of a failed intervention is high. Comprehensive response Second, the shift to coordinated intervention with the United States raises expectations for a broader policy framework aimed at stabilizing the yen. Intervention without a clear ceiling. Third, coordinated intervention effectively blurs the ceiling associated with unilateral currency intervention...With U.S. participation, however, the ultimate constraint on intervention has effectively been removed...

 

As a result, the market perception that FX intervention is ineffective could shift, at least over short- to medium-term horizons," BofA adds.