Yen Intervention: New Line in the Sand?

[TRADERguy]

Wondering what everyone is thinking about the Yen. Is 113 the new trigger point for Japanese intervention or are they just waiting until the start of next week after Dubai?

[ellhow]

Traderguy I think the whole intervention issue is beyond mysterious. I am no fan of the MoF now, seeing as how they say one thing and do another. What is more important is what do the Japanese exporters think? Is there pressue of the MoF from Japanese citizens? I haven't heard anything about this so if anyone knows the reaction in Japan, do tell.

[eternalfuture]

Here is the result of G7 meeting in Dubai

A closing statement from a meeting of the Group of Seven finance ministers -- the United States, Britain, Canada, France, Germany, Italy and Japan -- said a flexible currency rate "is desirable for major countries or economic areas" in order to let markets smooth out economic ups-and downs.

Even Japan agreed to support this statement. It seems that Japan will only intervene to smooth the yen appreciation rather than to reverse the direction in USD/JPY.

We all have witnessed that last week there has been no sign of BoJ whatsoever even as the yen continues to appreciate. So, it seems that they have succumbed to the pressure of US and other G7 members.

The question is how far would it go? What is the 'proper' USD/JPY rate?

115? 110? 105? 100?

This leaves another question: What about China? What if China let yuan loose?

[jasonjm]

proper yen/usd level is about 95 I believe....

it sucks that the BoJ has stopped intervention, it was wonderful extracting money from them, it was like a printing press in my wallet....

[ellhow]

Some recent data has shown that there is more investers money leaving Japan than entering Japan, which suggest that the yen ris was speculative. I can't remember the details of the data sorry.

[TRADERguy]

End of last week I was thinking their was a good chance of intervention today pushing the Yen towards the 117 level…well at least I was smart enough to stay flat.

[eternalfuture]

Traderguy, good for you for not trading based on wishful thinking.

The drop in usd/jpy could've been anticipated earlier as there were lack of signs of spike during the whole week. It was far different compared to the previous weeks when market seemed to be 'jumpy' whenever the pair dropped.

Perhaps BoJ held their bullets waiting for clear resolution in G7 meeting during weekend. And it appears that the other G7 nations succeeded in pressurising Japan to hold their intervention bullets.

Technically speaking, the breach of 115.03 previous support was pretty devastating for the pair.

Ellhow,

I still could not understand how come the money flow OUT of Japan instead of INTO Japan? Nikkei's rally towards 11000 last week surely required a huge amount of yen, while September book-closing also caused yen repatriation from US and Europe.
Additional inflows might have came from speculation over brightening prospect of Japan's economy. While still too early to say that Japan is finally out of the gloom, it still a reason to bet on it.

Or is it?

[ellhow]

It was something about the Japanese buying foreign bonds.