Now, can we trust BOJ to keep selling YEN as they said they would? I am ready to bet against the trend
1990-1995 USDJPY fell from 160 Yen to less than 80 Yen in 5 years. But from 1995-1998 USDJPY surged from under 80 Yen to over 146 Yen in 3 years. A very big V-shape price move shown on the USDJPY monthly chart. I wondered what fundamental news caused the huge price up and down in that period, and how likely we'll see a similar situation in the future. Your comments are appreciated
Thanks a lot JSSPMK. So it had something to do with BOJ interest rate change in those years. Since BOJ's interest rate has been near 0 for years and it's impossible for BOJ to cut rate further under the situation. So if USDJPY moves up in the following months or years, it could be because the Fed raise interest rate faster than BOJ does...
The Yen definitely looks toppy, but the real driver is the US Dollar which looks like it has more downside. Because of the Dollar and the Fed's activity in the markets, IMO timing the Yen as a stand-alone entity would be problematic from a pure timing call perspective. It's just me, but another great application for correlation analysis.
Nikkei Loses 15% In 1st Half On Strong Yen, Political Woes http://e.nikkei.com/e/fr/tnks/Nni20100930D30SS713.htm (IMO) I am certain Japanese will be doing something very shortly, even radical intervention can not be excluded to compete with the Chinese.
IMO if USD keeps on tanking that will benefit equities & commodities, so no immediate risk aversion, therefore less reason to convert into Yen, especially when fundamental reasons are considered against Yen investment. Pair that with technical reasons (check out cyclical oscillations on Monthly chart of price vs 20 SMA) & Japan government "promise" to weaken Yen/reduce volatility (to upside) & risk/reward is becoming more favourable to Yen downside IMO.
Japan FX intervention totalled Y2.12 trln in Sept http://www.reuters.com/article/idUSTKV00642420100930?type=marketsNews
Be careful, BOJ received a lot of critical voices after their first intervention. Honestly, I was very surprised to hear from the US and from Europe immediate political responses. BOJ might be less committed until their next central bank meeting to do anything.