Options dealers are increasing hedges for large JPY moves over the next two
weeks ahead of the Bank of Japan meeting and potential FX intervention. Two-week
USD/JPY butterfly spreads have risen to their highest since October 2022,
signaling elevated market concern about volatility. Despite record-scale FX
support spending from April 28 to May 27, the yen remains under pressure,
fuelling speculation of further intervention. Investors will watch the BOJ's
June 15-16 meeting for policy direction as the wide US-Japan interest-rate gap
continues to weigh on the yen; Moh Siong Sim, FX strategist at OCBC, says
intervention risk is the primary market focus as USD/JPY tests the 160 level.