🔴Japan and the US just carried out their largest coordinated currency intervention in over a decade: Trading volume on EBS (Electronic Broking Services), one of the world's largest electronic FX trading platforms, surged to ~$90 billion during Thursday's session. The surge came as Japan reportedly carried out a record-scale intervention, with Bank of Japan data suggesting the government sold as much as $59 billion during New York trading hours alone, according to Reuters. This also marked the first coordinated currency intervention between Japan and the US since 2011, following the yen's slide to its weakest level since 1986. The intervention came just hours before the Bank of Japan's policy decision, where officials held rates at 1% but signaled that further hikes remain possible as inflation risks increase. The move highlights growing concern among policymakers that yen weakness is becoming harder to contain as the interest rate gap with the US remains wide. Japan's next challenge may be funding further intervention without putting additional pressure on the US Treasury market it relies on to finance it. Japan's Ministry of Finance also highlighted access to the Fed's repo facility, allowing it to obtain dollar liquidity without necessarily selling large amounts of US Treasuries. Japan can intervene in the currency market, but the bigger challenge is whether it can defend the yen without creating new pressure in the Treasury market.