Japanese public invests ... in Japan. There is not back and forth.
U.S. interest rates drive UJ. If our rates rise, the price of our bonds drop.
Japanese pension funds (who do invest both inside and outside Japan) will sell our bonds and buy dollars driving one down and the other up. Which in turn send the Yen down as well.
That is it.
That and trade flows, unemployment, inflation, and ... and ... and etc.
U.S. interest rates drive UJ. If our rates rise, the price of our bonds drop.
Japanese pension funds (who do invest both inside and outside Japan) will sell our bonds and buy dollars driving one down and the other up. Which in turn send the Yen down as well.
That is it.
That and trade flows, unemployment, inflation, and ... and ... and etc.