Just heard from Morgan Stanley that $5 Billion was bought. Piss poor performance of $/Yen for that much size. Sorry to keep talking my book but it's the truth.
I think we could be near an intermediate top or major reversal in Gold, Euro and cable. They have been going up with stocks, are they going to fall with them too?
now i know why my phone was ringing several times in the middle of the night....massive intervention.. missed NYC last night..... however, am and was FLAT in yen. congrats to those who caught the move...... tired surfer
The Yen has bounced back quickly from each intervention, with the recoveries becoming quicker of late. That indicates powerful underlying demand for the currency and shows the path of least resistance is up. All the interventions are achieving is to provide a better price for everyone to buy Yen. A lot of the demand for the currency is driven by portfolio flows rather than short-term speculation, so the Yen will not suffer major weakness unless those inflows stop. IMO, the BoJ will eventually give up on their intervention when it becomes clear it is a hopeless case. If and when that happens, I would not be surprised to see a 5 handle move in the currency. There is also an interesting trade between the Yen and the Nikkei. Normally these are inversely correlated, as a strong Yen hurts the export sector and thus leads to stock weakness. However, both the Nikkei and Yen are in long-term bull markets and both are quite cheap. An interesting play therefore is to buy both the Nikkei and the Yen - that way, short-term currency losses should be mitigated by stockmarket gains, and vice versa. The net effect will be to create a portfolio with an increased total return, but with lower short-term volatility.