USD/JPY is up 185 pips to 150.95 today, and why not.
The Bank of Japan leaked that it would be adjusting policy and then delivered only a token shift that lacked clarity. Ultimately, they had to choose between the bond market and the currency market and decided to protect borrowing costs from turmoil. That's understandable.
But it's also understandable that the FX market no longer sees 150.00 as a barrier and will now test how far it can go.
This is particularly true because data from Japan today showed the Ministry of Finance didn't intervene in the yen in October. That's a puzzling revelation because of the 300-pip decline in USD/JPY on October 2. What else could it have been?
In any case, if they didn't intervene at 150.00 last time, then the market is going to find out where they will intervene, and it looks like we will be finding out in relatively short order. As Justin wrote earlier: "this seems to be a green light to allow USD/JPY to ramp higher."
The question is: How high? I'm eyeing 155, as I have for awhile.
