International Trading
Yen plunged against major crosses at 4 GMT on what seems to be another intervention by the BoJ. The USD/JPY was taken up to 85.83, fresh 1-week high. EUR/JPY received a similar boost, rising from 112.34 to 113.70, new 7-week high. GBP/JPY just hit a new 4-day high at 133.70. CAD/JPY jumped near 82.70, while AUD/JPY just recovered 81.00.
Forexlive quoted: “The MoF are not making any comment on whether they intervened or not. Sources tell me they did and the price action confirms this”. On top of that, speculations are circulating BoJ Governor Shirakawa is on the edge of resigning.
After the initial spike that sent Yen crosses upwards, most pairs retreated to previous areas: USD/JPY retraced its steps back to 84.70, the EUR/JPY followed in those footsteps back to 112.90 and the GBP/JPY did not miss out and pulled back to 132.75.
Bryan Rich at Money and Markets makes a case for the BoJ not backing out: "I expect Japan’s efforts to persist and pay off. But when you add in four more pieces of supportive evidence, the case is even stronger that we may have seen a long-term top in the yen. The evidence lies on 1-The yen is way overvalued, 2- The long yen trade is overcrowded, 3-History of successful intervention, 4- Debt, debt and more debt.” He finshed its analysis by saying: “This intervention could mark the beginning of increased global currency risk, another round of capital flight from high-risk currencies and another, more sustained, period of global risk-aversion"
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