Japan’s officials intervene yet again, sending USD/JPY sharply upThe Japanese yen fell sharply today as Japan intervened in the currency markets for the third time this year. This has, in a knock-on impact, sent the USD/JPY steeply up from its record low of 75.56 to as high as 79.50 - in fact it jumped this far within two hours. Judging from what we’re seeing in the market, the intervention came in several slugs (rather than a single shot) and has been quite persistent. Japan’s Finance Minister Azumi confirmed the unilateral intervention and noted in a press conference that he has already warned of "decisive steps" against traders’ speculative moves. Thus, he had ordered intervention at around 10:25 am Japan time. Azumi also noted that he will continue making such moves until he is satisfied with the outcome, but gave no indication of any target level. Some analysts hailed Azumi's move as being timed well, as yen long positions have piled up after the BoJ's announcement of further easing last week. Intervention would be more effective against such a backdrop, of course. Earlier this year, the G7 jointly intervened on the yen (this was back in March 2011) while Japan also intervened unilaterally in August. After the March intervention, USD/JPY jumped from 75.98 to 85.51 in less than three weeks. The impact of the August intervention was relatively weak and brief: USD/JPY rose from 76.28 to 80.23 in just three days but then weakened again and breached the 76.28 low within three weeks. Nevertheless, the impact this time around has been – relatively - much larger than that resulting from August's intervention. Based on the recent turn in market risk appetite in general, USD/JPY could well rise through the 80 psychological barrier to between 82 and 85 in the next two to three weeks. While USD/JPY takes the spotlight today, it should be noted that AUD/JPY is the strongest pair this month. It’s now at the 83.6 level, and is more than 11% above last month's close of 74.37. The strong return of risk appetite is one bullish factor, while Japan’s yen intervention is now another. The break of that 82.80 resistance level today further confirmed the prevailing view that the whole fall from 90.01 was completed at 72.04, after finding some support slightly above the 71.87 key support level. Market commentators are now talking about a resumption of the up-trend from 2008’s low of 55.09. However, there’s a risk inherent in tomorrow's Reserve Bank of Australia rate decision and the AUD/JPY could take a hit if the RBA sounds at all dovish. Plenty of traders seem to be staying bullish for the near-term, as long as that 80.71 support holds – with some expectations of a test on the 90.01 resistance ahead. Economic Indicators Due Out Today
GMT Ccy Events Actual Consensus Previous Revised 21:45 NZD Building Permits M/M Sep -17.10% 2.00% 12.50% 16.60% 23:15 JPY Nomura/JMMA Manufacturing PMI Oct 50.6 49.3 5:00 JPY Housing Starts Y/Y Sep -10.80% 8.60% 14.00% 9:30 GBP Mortgage Approvals Sep 50.5K 52.4K 9:30 GBP M4 Money Supply M/M Sep 0.30% -0.20% 9:30 GBP M4 Money Supply Y/Y Sep -0.60% 10:00 EUR Eurozone CPI Estimate Y/Y Oct P 2.90% 3.00% 10:00 EUR Eurozone Unemployment Rate Sep 10.00% 10.00% 12:30 CAD GDP M/M Aug 0.20% 0.30% 12:30 CAD Industrial Product Price M/M Sep 0.10% 0.50% 12:30 CAD Raw Materials Price Index M/M Sep -2.40% -3.20% 13:45 USD Chicago PMI Oct 59 60.4
Japan’s officials intervene yet again, sending USD/JPY sharply up
The Japanese yen fell sharply today as Japan intervened in the currency markets for the third time this year. This has, in a knock-on impact, sent the USD/JPY steeply up from its record low of 75.56 to as high as 79.50 - in fact it jumped this far within two hours. Judging from what we’re seeing in the market, the intervention came in several slugs (rather than a single shot) and has been quite persistent.
Japan’s Finance Minister Azumi confirmed the unilateral intervention and noted in a press conference that he has already warned of "decisive steps" against traders’ speculative moves. Thus, he had ordered intervention at around 10:25 am Japan time. Azumi also noted that he will continue making such moves until he is satisfied with the outcome, but gave no indication of any target level.
Some analysts hailed Azumi's move as being timed well, as yen long positions have piled up after the BoJ's announcement of further easing last week. Intervention would be more effective against such a backdrop, of course. Earlier this year, the G7 jointly intervened on the yen (this was back in March 2011) while Japan also intervened unilaterally in August. After the March intervention, USD/JPY jumped from 75.98 to 85.51 in less than three weeks. The impact of the August intervention was relatively weak and brief: USD/JPY rose from 76.28 to 80.23 in just three days but then weakened again and breached the 76.28 low within three weeks. Nevertheless, the impact this time around has been – relatively - much larger than that resulting from August's intervention. Based on the recent turn in market risk appetite in general, USD/JPY could well rise through the 80 psychological barrier to between 82 and 85 in the next two to three weeks.
While USD/JPY takes the spotlight today, it should be noted that AUD/JPY is the strongest pair this month. It’s now at the 83.6 level, and is more than 11% above last month's close of 74.37. The strong return of risk appetite is one bullish factor, while Japan’s yen intervention is now another. The break of that 82.80 resistance level today further confirmed the prevailing view that the whole fall from 90.01 was completed at 72.04, after finding some support slightly above the 71.87 key support level. Market commentators are now talking about a resumption of the up-trend from 2008’s low of 55.09. However, there’s a risk inherent in tomorrow's Reserve Bank of Australia rate decision and the AUD/JPY could take a hit if the RBA sounds at all dovish. Plenty of traders seem to be staying bullish for the near-term, as long as that 80.71 support holds – with some expectations of a test on the 90.01 resistance ahead.
Economic Indicators Due Out Today
GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
21:45 | NZD | Building Permits M/M Sep | -17.10% | 2.00% | 12.50% | 16.60% |
23:15 | JPY | Nomura/JMMA Manufacturing PMI Oct | 50.6 | 49.3 | ||
5:00 | JPY | Housing Starts Y/Y Sep | -10.80% | 8.60% | 14.00% | |
9:30 | GBP | Mortgage Approvals Sep | 50.5K | 52.4K | ||
9:30 | GBP | M4 Money Supply M/M Sep | 0.30% | -0.20% | ||
9:30 | GBP | M4 Money Supply Y/Y Sep | -0.60% | |||
10:00 | EUR | Eurozone CPI Estimate Y/Y Oct P | 2.90% | 3.00% | ||
10:00 | EUR | Eurozone Unemployment Rate Sep | 10.00% | 10.00% | ||
12:30 | CAD | GDP M/M Aug | 0.20% | 0.30% | ||
12:30 | CAD | Industrial Product Price M/M Sep | 0.10% | 0.50% | ||
12:30 | CAD | Raw Materials Price Index M/M Sep | -2.40% | -3.20% | ||
13:45 | USD | Chicago PMI Oct | 59 | 60.4 |
