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Numerous Rumors Of Imminent BOJ Intervention Drive USDJPY To 15 Year Low
As the USDJPY is currently probing fresh 15 year lows of 84.24, various London desks, Nomura, BNP and UBS are reporting that the last central bank bastion, the BOJ, is about to intervene. This despite Japanese Finance minister Noda earlier making no specific comment on FX intervention, although noting that the government needs to be flexible on policy response. Yet sending a somewhat contrary message, PM Kan said that sudden currency moves are not welcome and is watching the FX market closely. Also, the head of Japan's Rengo union has now called for a G-7 response to the near record JPY: looks like scapegoating the central banks' (transitory lack of intervention) for all economic ills is becoming a pandemic. Reuters is attempting to moderate the story somewhat by pointing out that some in the BOJ feel more evidence needed on damage from a surging JPY before easing policy. Yet the Yen vigilantes are out in full force, with the most recent 90 pip move driven by a push to force the BOJ's hand: at this point the likelihood of a bank intervention before September is material. Watch the Yen crosses for that very indicative V-fib 200 pip move that will signal that the BOJ has officially entered the currency destruction race. Elsewhere, the flight to safety and to bond bubbles continues, as the both the 10 and 30 Year German yields have fallen to fresh record lows of 2.237%and 2.894%, respectively.
h/t Peter
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Everybody wants to catch the top, but who will?
Domo arigato, Mr. Roboto.
Isn't this a portent of the future when China moves their reserves to the yen or some other currency other than the USD? If I was China, I'd rather have my reserves in a currency of a country a few hundred miles away with NO army or navy to speak of.
The Japanese won't like USD/JPY at 70 or less, but there is nothing they can do to stop it.
Paper FIAT currencies continue their race to the bottom. Proof that central banks do not care about how this hurts savers, and perhaps why gold is staying above $1200.
And Japan will fail to do as well as the Swiss have in their interventions.
The important part is "sudden currency moves"; at the moment we have a fairly orderly decline (90 pips intraday move doesn't mean much) and the BOJ will tolerate a strengthening Yen until this changes;
I fear loads of people will try to pick a bottom too early: i would attempt small long below 82, bearing in mind the 81.12 low in April 1995
i will recommend sell EUR/JPY
Implications for the Nikkei?
Gap down on the Nikkei open as invesors panic about the 8 handle on NKY and 83 handle on USDJPY. Then intervention rumours, very hard to say what happens after the first hour.
And USD/JPY just took a long stroll off a short pier.
The Japanese government don’t want to use their foreign reserves to intervene because if they did, their “kuchisaki-kainyu” (talk intervention) would not be as effective any more.
Even if they did intervene, I don’t think they would be able to reverse the trend.
And I think more people are starting to think like myself.
But the the chances for an intervention is certainly increasing and if it did intervene, watch out for 10%+ moves on a very short period of time.
Speaking of bonds, unless you're holding to maturity, sooner or later, you can kiss junior's college tuition goodbye,
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Updated S&P500 chart showing head and shoulders with target.
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