BOJ to Sell its Currency for the 3rd time in About a Year ?
BOJ (Bank of Japan) is sending warning signals to the market that if the Yen continues strengthening, it may have to intervene and weaken its currency. If the BOJ does intervene, this would be the 3rd time in about a year that we witness the Yen sell-off. It should be noted that the previous intervention have failed to sustain a long-term impact.
USD/JPY has reached the 77.04 low, hitting the 19 weeks low. As the currency pair is getting closer and closer to the 76.25 low (March 19th, 2011), the BOJ has stepped up the speculations of a “solo intervention” to weaken the Yen. Don’t expect the U.S or the EU to coordinate with the BOJ an “international” intervention, since they are facing their own economic dilemmas.
USD/JPY reached the 81.20 high yesterday and today, it’s slightly trading to the downside. Intraday bias remains on the downside, as long as the 82.78 minor resistance line is not broken. On the upside, if the 82.78 minor resistance line is broken it will change the sentiment to the bullish side and target the 85.50 major resistance line.
USD JPY has broken above the 82.00 level. Intraday bias remains on the downside, as long as the 83.95 major resistance line is not broken. On the upside, if the 83.95 major resistance line is broken it will indicate a change to the bullish momentum and target the 84.49 major resistance line.
The Dollar/Yen declined in Asian trading overnight after getting an initial boost from what the Bank of Japan describes as a “comprehensive monetary easing”. Last night the BoJ unexpectedly cut its benchmark interest-rate range to between zero and 0.1% from 0.1%, and pledged to maintain its policy until prices stabilize. It also revealed it would implement a new asset-buying fund.
An emergency easing by the Bank of Japan may have backfired overnight as the Yen erased its early losses against the major currencies. The BoJ made the move in the hopes it would weaken the Japanese Yen, but instead it’s business as usual this morning with the Yen sharply higher versus the U.S. Dollar.
The U.S. Dollar is strengthening this morning after the Bank of Japan decided to invoke an emergency easing plan. The BoJ avoided an intervention but instead decided to provide liquidity in an attempt to weaken its currency. The plan includes expanding its current 20 trillion Yen quantitative easing program to six-months from its current three-month time frame.
What is the Biggest Question in the Markets Right Now?
Now that the S&P rallied over 60 pct since last March 2009, and pretty much all other markets except housing and real estate have also rallied (anything connected to financial markets that received the half of the several $trillion of US and other central bank emergency money infusions beginning big around March 2009) it begs the question when there will be a correction. Or a crash.