Tuesday, September 14, 2010

The Japanese Yen: BOJ Intervention?

On July 22nd, I shared my "Buy analysis" of USD JPY at 86.93 and 85 on the argument that the Japanese economy and BOJ could not condone a stronger Yen for sustained period; and the Yen at the 85 , 86 level to the US dollar creates the risk of sovereign intervention. The Yen strengthened  to 85 against the US dollar and then more. I was rather surprised to see the Yen break 84.00 and that break triggered our stops to close that trade at a loss. Between July 22nd when I released the Yen analysis and now, the rhetoric from the Bank of Japan threatening intervention had been deafening but speculators kept pushing the Yen higher (USD JPY lower). Today, the Yen made a new 15 year high at around 82.87 against the US dollar and it seems the Japanese have just had enough of this Yen strength.  As I write, the Yen is being sold aggressively and i'm almost convinced the Japanese authorities are intervening.  I am looking for news from Finance Minister - Noda or the finance ministry to confirm rumours of intervention after which, I'll look for a pullback to get on the long side.

2 comments:

  1. BOJ has intervened in the FX Market for the first time since 1994. http://www.bloomberg.com/news/2010-09-15/japan-intervenes-for-first-time-since-2004-as-yen-surge-threatens-recovery.html

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