Archive - Nov 2, 2011

• The FOMC is expected to keep the Fed funds rate unchanged in the range of 0%-0.25%
• Policymakers may consider large-scale purchases of MBS to help the housing sector
• The FOMC may cut its growth and inflation projections for 2011 and 2012

This week's MoF intervention in the FX markets, while not quite unprecedented (trailblazer Hildebrand aside), was certainly sizable, surprising, and potentially sustained - no matter how many times we were told by Mr. Azumi that he was 'watching' closely. Our question, and one discussed in a Bloomberg story this evening, is it possible to change the course of USDJPY via intervention - and perhaps more presciently (given growing global interest in capitalist/Keynesian spending escalation), was the expected $512bn loss that the country faces on these FX positions alone worth it? Tohru Sasaki, of JPMorgan's Global FX Strategy group, address his concerns at both the unilateralism and the worrying perspective that the Japanese might try to emulate the SNB - which he sees as almost impossible to achieve - especially since the ceiling on CHF leaves JPY and USD as the only anti-cyclical currencies.

“It’s difficult to change the trend of the currency market.

Even if the action can stem the currency’s gains temporarily, the yen will eventually appreciate.”