A look at the day ahead in European and global markets from

Ankur Banerjee

Aided by the U.S., Tokyo's coordinated effort to pull the

Japanese yen away from 40-year lows was probably what was needed

to turn the tide for the frail yen, but will require monetary

policy follow-through to make the move stick.

Japan and the United States conducted coordinated yen-buying

intervention, Japan's finance ministry said on Monday,

confirming a rare bilateral action, the first such move since

2011, and warned they will not hesitate to take further action.

A Reuters photograph on Friday highlighted the joint effort

being undertaken as U.S. Treasury Secretary Scott Bessent

exposed a "to-do" list during a cabinet meeting indicating he

was contemplating U.S. purchases of $5 billion to $10 billion

worth of Japanese yen.

Taken over Bessent's shoulder during an on-the-record

portion of the meeting, the Camp David notepad bears the

underscored words "To Do" followed by "Buy Japanese Yen (JPY)

$5-10 bil."

The to-do list for Japan though is likely to be much longer.

The oil-importing country will be hoping that a deal to end the

war in the Middle East could be on the cards after U.S.

President Donald Trump's statement that talks with Iran will

take place later in the day.

Oil prices slid following Trump's comments but Asian stocks

remained under pressure as investors remained sceptical of a

deal being struck.

Analysts also point out that Japan's monetary policy remains

the crucial part of the broad picture as interest rate

differentials need to narrow for the yen to strengthen.

That has put pressure on the Bank of Japan to hike and hike

soon. The two-year JGB yield, which is most

sensitive to near-term monetary policy moves, briefly hit

1.545%, the highest since 1995, as markets priced in the chance

of an early rate hike.

For now, the yen remains on the charge as it suddenly spiked

in early Asian hours in what analysts suggested could be

another bout of intervention. That left the currency at 156.54

per U.S. dollar, well away from the 1986 lows of 163.99 it hit

in July.

Key developments that could influence markets on Monday:

Economy events: Germany retail sales for June and July PMI data

for France, Germany, UK and the euro zone