Japanese Put and Japanese Intervention

Discussion in 'Trading' started by tradingjournals, Aug 24, 2010.

  1. Is the Japanese put worthless or dear? I read that they said they would not allow USD/JPY to close below 85. It is now at 84-- the pair is showing the finger at Fukushimas and Yamamotos. We can give the Japanese the benefit of the doubt because it was night there when the pair was showing the finger.

    Do you think they will intervene today/later this week? Let us see if they will send their Mammamotos and PapaHiros today, and what the effect will be.
  2. They are looking for the right timing. Nomura, Bank of Tokyo Mitsubishi, Mizuho and Sumitomo have to first screw retail traders. If they capitulate and are trapped into further YEN strength whatever BOJ and finance ministry say, USD/JPY will rebound.
  3. The Yamamatos may have already been screwed if they defended above 85. They lost the face on this one. They have one day to show that they allowed it just to trap the bears of USD/JPY. Otherwise, the 85 might become a worthless call option, and the Japanese's words become worthless.
  4. These alleged facts from an FXCM blog.

    77% of the worlds FX transactions are made by and between the top 10 traders. Retail FX amounts for <2%.
  5. The Japanese have never promised to intervene. Not at 85, not at 84, nowhere. Moreover, they have probably looked at the SNB interventions earlier this year and maybe decided to wait and see, rather than waste money in what might end up as an ultimately futile and costly gesture.
  6. A few years ago the BoJ intervened to sell Yen because it was "overvalued" and had "gone too far" up at 108. It's now 85. They have twiddled their thumbs, doing nothing but spout hot air for the last 25 points. Some use that intervention was.

    I'm not sure why listening to the BoJ will work any better now than it did then. If you successfully front-run their intervention, you might make 5 points in a few days. If you get it wrong, you might lose 5 points in a few days. Hardly a great edge.

    Like the SNB, the BoJ are flim-flam artists and serial weak-hand interveners. Dips caused by the shenanigans are dips to buy 90% of the time. One day they may learn that interventions generally only work when the market would have reversed anyway of its own accord, and are thus pretty much pointless. Central banks should stick to their job, being lender of last resort, rather than pissing away taxpayer money to feel important in the FX market.