Japan intervened in the forex market – report

Read full post at forexlive.com

The

report
cites
a
source.

Atsushi
Mimura

replaced
Masato
Kanda
in
late
June
as
Japan’s
top
currency
diplomat
and
we’ve
been
eagerly
awaiting
a
new
strategy.
Kanda
relied
heavily
on
verbal
intervention
and
then
tried
to
squeeze
the
market
after
it
blew
through
higher
levels.
He
ultimately
spent
$60
billion
in
a
temporarily
successful
intervention
that
knocked
USD/JPY
down
by
800
pips.

It
later
recovered
though
and
I
don’t
think
that
playbook
would
have
been
as
successful
a
second
time.

Enter
Mimura.
The
new
strategy
appears
to
be
to
wait
for
help
—
this
time
from
US
data
—
and
go
with
the
momentum.
I’ve
written
about
this
strategy
several
times
and
how
it’s
had
more
success
globally.
You
want
to
swim
with
the
current
and
this
is
an
indication
that
will
be
the
new
policy.

The
slip-up
here
—
I
think
—
is
that
they
leaked
it
(although
we
certainly
suspected
it).
I
would
expect
dip
buyers
to
jump
on
this
now
that
it’s
clear
what
happened.

At
the
same
time,
I
now
think
it’s
more-dangerous
to
hold
USD/JPY
longs
through
US
data
releases
—
particularly
top-tier
data.
Your
risk-reward
is
heavily
skewed
towards
the
downside.
That
could
lead
to
longer-term
specs
abandoning
this
pair
and
help
to
do
the
MoF’s
work.

Ultimately,
the
fundamentals
are
what
they
are
and
that’s
why
USD/JPY
is
near
38–year
highs.
The
only
thing
that
can
change
that
is
the
fundamentals
are
there
is
no
real
momentum
around
higher
rates/inflation
in
Japan.
So
the
key
is
the
US
dollar
side
and
that’s
starting
to
cooperate
but
it’s
a
long
road.