Japanese officials said Tokyo coordinated with the US Treasury to buy yen, and both President Donald Trump and Treasury Secretary Scott Bessent later confirmed US participation while leaving the door open to another joint operation. After those statements, USD/JPY pulled back sharply from levels near 164 seen last week, at one point falling to around 155.20, while an Associated Press reading on the morning of Aug. 3 showed the pair near 156.34. A Reuters photograph taken on July 31 added another layer to the story. Bessent’s notepad at a Camp David cabinet meeting included the line: "To Do: Buy Japanese Yen (JPY) $5-10 bil." That note does not confirm how much was actually bought, and the US Treasury had not formally verified a figure at the time. Even so, the image suggested Washington had considered a purchase large enough to matter to leveraged traders. The intervention has changed the risk profile of yen-funded carry trades rather than erased the strategy outright. The Federal Reserve kept its federal funds target range at 3.50% to 3.75% on July 29, while the Bank of Japan left its short-term policy rate at 1% on July 31. Japan’s financing choices also matter for global markets: Bessent said the Federal Reserve’s FIMA repo facility was used in the operation, a mechanism that can provide dollar liquidity against Treasuries without requiring immediate outright sales.

The Bank of Japan said Monday that rising global demand tied to artificial intelligence could put lasting upward pressure on inflation in Japan, a view that may add to the case for a near-term rate hike. According to the central bank, AI adoption should improve productivity over the medium to long term, and as companies and workers adapt to the technology, that process could eventually weigh on prices. In the near term, however, the BOJ said the inflationary effects of the AI-driven investment boom may outweigh the benefits from higher productivity. The bank said stronger investment activity would lift demand and push prices higher. It also noted that global producer prices have risen partly because oil prices moved up after conflict in the Middle East, while AI-related goods have seen what it described as a positive global demand shock. The report added that spillover effects from AI demand are likely to persist for some time. Combined with higher import costs linked to yen weakness, the BOJ said domestic inflation in Japan may continue to face sustained upward pressure.

According to a report cited by ChainCatcher from Jinshi, a range of major developments took place yesterday across China and overseas markets. In China, the China Securities Regulatory Commission approved the registration of coking coal options, while the BeiDou Navigation Satellite System completed an in-orbit upgrade. The State Administration for Market Regulation also launched price compliance guidance for the photovoltaic industry, and China’s three major telecom operators are set to stop issuing phone cards through third-party internet channels. Overseas, the Bank of Japan left interest rates unchanged, and South Korea’s KOSPI posted its biggest single-day gain on record. The report also said hawkish pressure inside the Federal Reserve is rising, with multiple officials backing further rate hikes. The update was published by ChainCatcher and attributed to Jinshi.

Bitcoin traded near $63,900 on Friday and was little changed after the Bank of Japan kept its benchmark interest rate at 1%. Markets took Governor Kazuo Ueda’s hawkish tone in stride, with the yen giving back its move during his press conference and USD/JPY returning to where it began. Traders had already priced in a high probability of an October rate hike, limiting the market impact of his remarks. Ueda said inflation should move above 2% later in the current fiscal year and cited AI demand and yen weakness as factors pushing prices higher. Those same themes have been central to crypto trading this month, with a softer yen supporting the carry trade that channels capital into risk assets, while the AI investment cycle has remained one of the macro trades bitcoin has tracked closely. Elsewhere, the broader crypto market was calm. Ether held near $1,885, while BNB was the standout among major tokens, rising 3.5% on the day and 4.4% over the week to around $591, according to CoinDesk data.

Bank of Japan Governor Kazuo Ueda said on July 31 that Japan’s economy is expected to maintain moderate growth, while inflation is projected to move higher later in the forecast period. Ueda said year-over-year CPI growth in the second half of fiscal 2026 is expected to accelerate to a level “clearly above” 2%. He also said the Bank of Japan is expected to continue raising interest rates and will adjust the degree of monetary easing in line with economic conditions, price trends, and financial developments. The remarks were cited by BlockBeats, which referenced Jin10.

The Bank of Japan kept its policy rate unchanged at 1% on Friday in an 8-1 vote, matching expectations. The decision came one month after the central bank raised its benchmark rate to the highest level since 1995. Board member Hajime Takata dissented and backed a 25 basis point increase, arguing that conditions had entered a new phase and that the BOJ should respond flexibly to upside price risks and changes in overseas financial conditions. The central bank said it will continue to raise rates in line with developments in the economy, prices, and financial conditions. It also said underlying inflation is close to 2%, financial conditions remain accommodative, and both major downside risks to economic activity and major upside risks to prices have eased. In its latest outlook, the BOJ lowered its fiscal 2026 core CPI forecast to 2.5% from 2.8% and raised its fiscal 2026 GDP growth forecast to 0.6% from 0.5%, according to Jin10, as cited by BlockBeats.

According to Jin10, T. Rowe Price portfolio manager Vincent Chung said the Bank of Japan is expected to leave interest rates unchanged on Friday, while potentially signaling a quicker pace of rate increases. He said that if the BOJ accelerates its policy normalization process, there could still be two more rate hikes this year. Chung also said a clear and sustained appreciation in the yen would require a combination of faster monetary tightening, lower energy prices and more coordinated foreign-exchange intervention measures. The remarks focus on the central bank’s next policy signal rather than an immediate rate move, and point to the conditions Chung believes would be needed for the yen to strengthen in a durable way.

A wave of selling hit semiconductor-linked trades from the U.S. into Asia after several negative catalysts landed almost at once. Nvidia fell about 5% in U.S. trading, the Philadelphia Semiconductor Index lost 2.23%, and selling then spread across Korea, Japan and Hong Kong’s AI hardware-related assets. South Korea’s KOSPI dropped more than 10% intraday and triggered circuit breakers twice, while SK Hynix and Samsung Electronics came under heavy pressure. Leveraged Hong Kong products tied to Hynix and Samsung each fell more than 20%. The market focused on four overlapping concerns: reported progress in China’s domestic semiconductor supply chain, renewed worries over Nvidia-linked AI infrastructure financing and guarantees, profit-taking after a strong run in chip stocks, and fresh questions about AI spending after Moonshot AI’s Kimi K3 open-sourced its model weights. Reports from The Information, Bloomberg, Reuters and market comments from JPMorgan, Samsung Securities, Citrini analyst Jukan and Nomura Asset Management strategist Hideyuki Ishiguro all fed into the repricing. At the macro level, investors are also bracing for policy decisions from the Federal Reserve and the Bank of Japan this week, adding another layer of pressure to richly valued technology and semiconductor names.