It looks like more and more that they could do it. their dependency on exports and the fact that their companies are all getting squeezed is starting to raise depression talk about japan
I wonder how a weaker yen will stop the deleveraging and get us consumers to stop reigning in their expenditures. Maybe they should promote a stronger yen and boost their own consumers and consumer industries.
Yes, the talk has been there for some time now... But the fact of the matter is that there is a huge unrolling of carry trades, as well as massive repatriation effects - especially this week on the back of Q3 numbers, which have soured the mood. In financial terms, a strong Yen is helpful to Japanese banks etc - while it is bad for the exporters, but worst is the recession deepening everywhere. I am just too skiddish to trade right now. It went ok yesterday, but when looking at how the Asian session went overnight - it is just too unpredictable for my liking - even for scalping. Sure, if you go for +10pips - then you might get some confidence, but even that is somewhat difficult. Comments are also that markets are not particularly liquid - so the chopping action is exacerbated. The current levels are just extremely difficult to come to terms with... EURJPY, EURUSD and USDJPY - all tricky - and I think I'll wait for some substantial news before I get in again, unless it does unlock a little and get more predictable. Right now - there is no sense if Yen will go higher or lower. There were some observations from BoJ last night, but nothing substantial - just that they might need to adjust interest rates to keep up with others. The only "sure things" I see, are tied to time-of-day... where some intra-day/situational trend can be seen towards the end of RTH sessions and just after some time of RTH opening (60-90 mins into sessions, and 60-90mins before ends). Looking at larger timeframes - this week has just been market murder, and not at all predictable - just 20-20 hindsight. Right now the EURUSD 1.28 is under threat, as well as 97 on USDJPY - and it becomes too uncertain, as there is no real support anywhere, nor resistance. When news comes - if it comes this year - it will be very hard moves, and extremely large choppy moves in between - somewhat unpredictable just like the way down - but longer pops.
NHK TV news is chock full of bad news for tourism and exporters because of the strong Yen -- e.g AUDJPY . There is a new government forming in Japan as well, but this just further strengthens the case for some Yen intervention. It will come unless markets anticipate the moves, and repatriation effects diminish - but when... that is the question. I guess this week and the worst Q3 fallout has to pass before any real effect could be had because of the repatriation effects etc. On the other hand, Taro Aso (LDP prime minister) promised tax cuts and a balanced budget by 2010... so I guess they will play it very careful forward. USDJPY will be the most important indicator of how things will fare short term - and the leader of the pack, I think. The largest effects will no doubt be on the EURJPY - i.e the biggest risk/rewards.
Despite the seeming chaos there are still plenty of opportunities, all you need to do is adapt because who knows how long these conditions will last. Adapt & Prosper! Onward & Upward!!
Even scalping is impossible at this juncture. Sure, you can get lucky once or twice, but I'm watching some pairs skip around 40 pips in less than one second. Less than a second. I timed it. It sucks - why work on a system to adapt to it when these conditions cannot possibly be around for too long? Such a system isn't tested anyway. I prefer to sit back and take a vacation.
How do you know it wont be around for long? Just cuz it hasnt before doesnt mean it wont be like this for a very long time
Japanese government "might" intervene in the JPY.... It is the most manipulated currency in the world, bar none. Chinese renminbi is a poster child of transparent exchange rates compared to JPY. "All daily return distributions have excess kurtosis relative to the normal distribution (Equation 3) and all distributions appear to skew to the left with the exception of the Japanese yen" pg.9 http://andromeda.rutgers.edu/~yangruwu/TechTrade_JMCB.pdf This working example above is a direct involvement of the invisible hand of the Japanese govt. weaking the yen whenever they can. Yet another example, they have actually changed the formula by which they calculated CPI over the last couple of years to diminish the inflation expectations. Comical.