It’s a bit of a paradox that if traders are indeed on intervention watch and reluctant to buy USD/JPY ahead of the 150 level where many think the BOJ may step in then there is little profit taking from longs up higher to slow the ascent of USD/JPY.
Bloomberg (gated) have an article up ahead of the Bank of Japan statement due tomorrow saying:
- The market is on tenterhooks ahead of the Bank of Japan’s policy decision on Friday as they await more detail from Governor Kazuo Ueda on the outlook for negative interest rates and his view on the yen’s weakness.
- The currency appears to be caught in limbo early Thursday, with the risk of intervention offering support while the widening yield gap with the US weighs against this.
Earlier during the session here we had fairly weak verbal intervention from Japan’s chief cabinet secretary Matsuno. The impact on USD/JPY was to push it down just a few points, not much at all. Matsuno is trying to slow the drop in the yen in the face of an eve more favourable carry trade as the yield on the US 2-year hits its highest in 17 years.
This article was written by Eamonn Sheridan at www.forexlive.com. Source