Innovation or desperation?

Read full post at forexlive.com

The
last
16
hours
have
been
a
bit
off
colour
for
Japan
in
their
attempts
to
stem
the
depreciation
in
the
yen.
For
one,
they
reportedly
intervened
in
the
market
to
try
and
capitalise
on
a
softer
US
CPI
report
during
the
start
of
US
trading.
Then,
they
even
allowed
for
said
move

to
be
leaked
quite
quickly
after.

I
mean,
sure,
we
all
had
our
suspicions.
But
it’s
quite
unlike
Tokyo
to
so
easily
let
the
news
come
out
just
like
that.

USD/JPY
is
down
nearly
250
pips
since
before
the
US
CPI
report
but
somehow,
this
still
looks
like
a
failure
on
the
part
of
Japanese
officials.
If
you
want
to
frame
it
in
another
way,
the
pair
is
up
some
170
pips
from
the
low
of
157.40
after
the
reported
yen-tervention.

So,
why
did
Tokyo
decide
to
make
a
move
during
one
of,
if
not
the
most
liquid
period
in
trading
yesterday?

The
obvious
being
that
the

US
inflation
numbers
were
a
miss
on
estimates.
And
the
details
also
revealed
softer
price
pressures
in
general.
All
of
that
says
the
narrative
that
the
disinflation
process
is
still
playing
out,
although
I
would
argue
that
it
is
still
continuing
at
a
rather
gradual
pace.

Is
all
of
that
enough
to
compel
the
Fed
to
cut
rates
in
September
or
at
least
three
times
this
year?
Well,
that’s
a
topic
for
another
debate.
But
on
the
latter,
I
still
have
my
reservations.

In
any
case,
Japanese
officials
were
certainly
hoping
to
get
some
kind
of
bang
for
their
buck
in
driving
USD/JPY
lower
alongside
some
added
dollar
selling.

Their
previous
intervention
effort
came
during
illiquid
market
hours
and
that
has
been
faded
during
the
course
of
May
and
June
trading.
So,
this
is
definitely
something
new.
But
is
this
really
a
sign
of
innovation
on
their
part?
Or
is
it
a
sign
of
desperation,
in
the
sense
that
they
are
running
out
of
ways
to
stop
the
yen
from
falling
much
further?

In
my
view,
it
matters
little
whether
it
is
one
or
the
other.
Ultimately,
it
comes
down
to
the
fundamental
narrative
in
Japan.

I
still
don’t
see
the
BOJ
being
convincing
enough
to
tighten
monetary
policy
aggressively.
And
I
reckon
that’s
a
view
that
broader
markets
are
also
sharing
for
the
most
part
even
until
now.

So,
yes.
There
is
no
doubt
that
Tokyo
is
still
trying
to
plant
its
feet
on
the
ground
in
stopping
further
depreciation
in
the
yen.
But
it
doesn’t
help
their
case
when
that
is
really
the
only
pushback
factor
with
little
else
to
drive
traders
into
looking
at
the
other
direction.

Even
when
it
comes
to
the
technicals,
USD/JPY
is
still
retaining
its
uptrend
for
the
year
after
the
swings
since
yesterday: