Wednesday September 15, 2010 - 11:42:06 GMT
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Forex Blog - JPY Intervention Primer
I posted this on GVI Forex and it should act as an intervention primer as the MOF relents and authorizes the BOJ to intervene. Once it goes this route there is no turning back and history says it is only a matter of time before the market tests its resolve, as it did with the SNB.
To sum up the general thinking:
- Japan intervention is unilateral
- If you see another CB intervening, such as the Fed, assume it is on behalf of the BOJ
- Japan has a large war chest to intervene but it is doomed to failure unless accompanied by other measures, such as QE. Also, watch to see if interventions are sterilized.
- In early days of intervention, BOJ actions will tend to have the greatest effect.
- Market will take note of the SNB experience with its massive interventions. Early on it won the battle but longer-term lost the war.
- Short-term goal seems to inflict pain on the speculators. In this regard watch the levels I posted earlier in the upper 85s, including the key daily trendline (85.99).
- Watch the most recent levels where BOJ intervened to see if usd/jpy trades above it or fails to hold those levels
- In short-run, 85.00 will be a key to setting the tone.
- Watch for exporter offers.
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