I said a little earlier that Japanese authorities would become more shrill ahead of actual intervention to support the yen.
I should clarify initially that we have seen intervention, its just been in verbal form. All those remarks about wanting FX to move stably, yen moves not to be too rapid - you've heard all these many times in the past months as the yen has dropped. they are a first stage intervention. Mild stuff but effective to begin. They quickly lose their impact though.
So, what about actual intervention, that is, the Bank of Japan entering the FX market to buy yen? (Please note the BOJ will conduct the operation, but it'll be at the direction of Japan's Ministry of Finance - thats how they do things in Japan).
What you want to be listening out for is more specific, and it'll go very much like this, key phrases to be aware of:
- we do not want to see one-sided moves in FX
- we do not want to see excessive moves in FX
- FX movement is not reflecting fundamentals
- we will not tolerate speculative movement
- The Ministry of Finance will combat excessive moves
Watch out for those. I will be and will let you know also.
USD/JPY update:
