USD/JPY Discussion

Couple of buys so far this morning and looking Okish. Tight stops of 20 pips now set at BE. See if it does a runner. Nice if we have past the bottom of this horrible trend down.

BOJ is just back to office. Checking thier emails and found one from the ink supplier tellin gtheir inability to supply more ink, as the supply has been bought by US at high price. Another email from Geithner threatening not to disrupt world ink supply, coz his machines are all fired up....

lol...relax guys....BOJ has never done anything obvious. So you want to wait for intervention on first day of work?

I too saw that - looks slightly more of a downreach followed by a 70 pip retrace, which has been rare over the last weeks. There's also been some yen weakness, which I'd assume Noda and company are optimistic about.

DXY though I don't think is ready to completely reverse - not much reason I can find to do the reversal here, so I think it's going to do a reverse back up to the 38.2% and 78.4, at which point it needs to decide to head north or - my prediction - resume back down to the yellow trend line.

Helping a small USD retrace might be a renewed spotlight to Europe where on the heels of this weekend's failed G7 discussions have seen their bankers declare the euro is hitting overvalued zones, along with what's shaping up to be a fairly big week of unrest in France, plus difficult to shun debt issues out of the eurozone. So, as every currency owner joins the race to talk down their currencies, we might be seeing some of the US dollar dumping result in profit taking on what they bought instead.

Can't forget though the likelihood of QE2, whatever they call it - it's widely expected. And what uncle sam does, sterling may not want to be left out of, and so on, not to mention intervention ... sooo many wildcards!

Japanese economy minister Kaieda says rapid Yen rise undesirable; says Japan will respond boldly to strong Yen

Read more at: Forex @ DailyFX - NetDania Charts | Forex Charts from DailyFX http://www.dailyfx.com/charts/netdan...#ixzz126OAb6fU

I think we're on the same page here.....you're right, there is so many wildcards that it's extremely difficult to know which way we are going...and when!

As far as the Euro/Usd is concerned, I do see a pullback/correction as likely, which may in turn push the Yen down a little. If that turns out to be the case, I can't think of a better time for Noda to do his thing!!

In my opinion, the fact that Noda is "verbally intervening" today means that they aren't going to do any actual intervention today or probably even this week. If you recall they have been doing this type of verbal intervention regularly for the past few months and have only really intervened with any conviction once (only after weeks of this type of verbal intervention). Intervention will likely come again but I feel like it won't happen until we hit 80 or lower... Of course, nobody really knows except the BoJ themselves.

For any that are looking to learn expand their understanding of market inter-relationships and gain more of an appreciation into how fundamentals drive markets, this is a presentation by Ashraf Laidi done last week in Sweden. There are more videos on the page that can be worth watching.

The link I'm providing is about 36 minutes; half way through, Ashraf discusses the current euro level (has trouble being convinced it's going upwards from here, without a dip at least), discusses sterling and BoE measures and mentions Japan towards the end. If you don't follow Ashraf on his site or on twitter, you're missing out on some good tips and assessments. Enjoy.

http://www.sparaochplacera.se/common....aspx?id=10926 - scroll down and choose the video titled "CMC Markets - Ashraf Laidi" or try this direct link; sample image follows

Looks good.....I've bookmarked it and will watch it later. Thanks

and he is watching closely... -don't forget this sentence-..

hmm... without intervention, it will bearish until 81.3x.....

Just was looking/thinking out to the fx calendar ... I don't think intervention is in the cards until Nov 2 (mid term elections) & Nov 3 (FOMC decision) - a BoJ move prior to that could be undone by those 2 events, and therefore very costly and ineffective. And, early Nov may coincide with a USDX bottom and obviously further USDJPY lows. I wouldn't be surprised to see BoJ introduce other QE measures before then to stem the yen, but alas, I tacticize on their behalf.

Another scenario is for the USD to recover until then - as we're seeing with the EURUSD for a few days now but trend change unconfirmed IMO - and then for the USDX to resume it's fall upon a QE2 announce, while stocks rally on the news.

Interesting how the USD is making good ground against pretty much everything, except this pair......

Majority of traders is long on UY now, expecting some sort of intervention or other any moment.
BUT:
Many of those will have to close some of their positions by October 17, when new leverage rules come into force. So BOJ can calmly wait for the event to help them with their task...

LOOK AT THIS DAILY! I'm not trading this move against the yen....

How would you know the majority's long? COT? Retailers like us are one thing, and completely irrelevant to the fx market. I don't see confirmation on longing nor any time commitment to it - but big boys are another. Smart Money knows what the key dates are and what the US is up to, and I doubt they are long, yet. There might be some accumulation going on (and they're able to handle hundreds of pips down still), but we can't say a bottom is in.

look it breaks the resistance channel and now is acting as a support...think i will enter once it reaches 81.30... or when BOJ intervene, or when it seems clear that BOJ is doing small intervention to give the impressions of reversal to whatever powers that moves the market. they act behind the scenes....

This article has been posted on The Source, the Wall Street Journal Online's site for European real-time analysis http://blogs.wsj.com/source)
Posted by Katie Martin

It looks like Japan could be inadvertently making the yen stronger.

Almost a month ago, the Bank of Japan, acting on the Ministry of Finance's behalf, dumped some $24 billion-worth of yen in an effort to push the Japanese currency down--its first intervention in six years and its biggest ever.
It worked. Kind of.
The dollar shot up from what was then a 15-year low just under Y83 and stuck at around Y86 for most of the next week. While the dollar has taken a beating against many other major currencies since, its decline against the yen has been slower.
Traders clearly fear a return of the MOF to steamroller the yen lower again.
Now, though, something weird is going on.
The yen is climbing again, slowly but surely. Most market watchers thought a fresh decline under Y83 would bring the MOF back in. That level came and went with no sign of the Japanese authorities to push it back up. It dropped under Y82...still no sign.
So, what does this mean? Was the MOF mucking about when it intervened Sept. 15?
Hardly. It meant it. And it has made it clear that it will step back in the market if the yen becomes uncomfortably strong again. So why hasn't it come back in? It's not as if the international community seems to mind a fresh sting, judging from the lack of any direct criticism at the International Monetary Fund meeting over the weekend.
If it doesn't act soon, market-watchers warn that the MOF risks losing credibility. Traders could spot their opportunity and hammer the dollar lower against the yen.
Commerzbank reckons that the Japanese authorities are following a strategy of intervening at gradually lower and lower levels for the dollar--a practice known as "leaning against the wind" that is designed to slow big trends, not to reverse them. The problem with that, for those that fear currency strength as a danger to exports and a neat way to import deflation, is that it signals general comfort with the way the wind has been blowing, drawing in growing crowds of yen buyers that are keen to pounce on any artificially-engineered bouts of weakness in the currency.
The MOF will therefore make a loss on its dollar-buying splurges, Commerzbank says. In a sense, that doesn't matter, since the MOF wasn't seeking to make a currency-punting profit.
But here's the rub: a loss for the MOF means a gain for someone else.
"The more the BOJ generates this kind of profit for those who speculate against it, the more attractive this strategy becomes for all speculative market participants," Commerzbank says.
That means, next time around the MOF will have to intervene even more heavily than it did on Sept 15 to hold down the yen, and it might in fact end up with a stronger yen than it might otherwise have done.
The German bank reckons the Japanese authorities will stick to their strategy, and reenter the currency markets soon, but the risk of a sharp decline in the dollar down to Y80 is building.
Something may come to the MOF's rescue, however: the dollar. Oh, the irony.
Traders are getting jumpy that the U.S. currency's drubbing has become overdone. The fear is that too many accounts have sold dollars too heavily, and the market has exaggerated the likely currency impact of what will probably end up being modest bond-buying by the Fed.
Tuesday, the buck is in the early stages of what may prove to be a serious fightback against the euro, sterling, the Swiss franc and other currencies. If the super gloomy forecasts on the U.S. economy and monetary policy brighten even slightly, there's a chance the buck could climb against the yen too.

quote from the previous post "It looks like Japan could be inadvertently making the yen stronger."

I see it on the UY chart that JP gov has been intervening since Sunday opening. Then, what is the point JP gov is trying to make? They just want to keep it above 82?

I think UY goes down to 80 pretty soon when some big UD$-selling or yen-buying surges come.

What's your thought?

If this is all what they look forward to they will not succeed. and the level 80 on the table.

any unexpected event enough to send it to 80.