What is happening in the market on September 7, 2022?

After announcing the new quarter and the two major statistics (ISM Index and employment data),after holidaysinvestors who had been wavering until nowchange mindlikely did so.

Some investors who were caught in the idea of “rate hikes ⇒ U.S. economy slowdown ⇒ inflation subsides ⇒ rate hikes stop” probably remained indecisive and hadn’t acted even after hearing Chairman Powell’s speech in Jackson Hole.

(1) Even if the U.S. economy slows, if inflation remains above 2%, the Fed will not loosen the reins on rate hikes.
(2) Real interest rates remain negative and accommodative; ISM indices (both manufacturing and non-manufacturing) and employment data are solid.
(3) The Fed is serious about curbing demand. It is ready for a recession. This is reflected in commodity prices falling.
(4) The world cannot keep up with U.S. rate hikes. If the ECB faces a recession, it will hesitate to raise rates sharply.

In short, the Fed isprepared to accept a recessionin order to suppress inflation. Whether you believe this or not depends on you. After 40 years of being accustomed to demand-management-style monetary policy, it is natural that some investors cannot immediately change their views.

Now, such investors who have changed their minds likely moved to further rate hikes; if so, they would sell Japan’s yen, where monetary policy differences are clear.
U.S. one-year rate hikes are triggering a yen carry trade.

Now, the problem is, when this happens, there’s no reason for the yen to appreciate.
If Brent crude oil falls below $60, Japan’s trade balance would improve considerably. If that happens, the current account would improve, and yen buying would occur. But that is in the future.

If those who profited from long dollar/short yen positions take profits, that would be good, but carry profits (swap points) make large take-profits unlikely.

Is there no choice but currency intervention?
Or, if everyone follows the same direction and the same actions, would that mark the end of the market?