“This morning the dollar rose against the Yen reaching 109.26 rebounding from its 18 month low of 105.53. Japans Finance minister Taro Aso said on Monday that Japan would have no hesitation in intervening in the currency if the Yen continues on its long term trend and continues to strengthen. Today and yesterday’s growth of the Dollar against the Yen might just be the sigh of relief that he was looking for from his statement.
“With the G7 meetings around the corner Japan may not be too eager to act on their statements’
These comments will surely make a lot of long traders invested in the pair sceptical on their position and start asking the question, “At what point are Japan willing to intervene?”
Japan reiterated their statement this morning but Mr Aso also indicated that the US and Japan do not agree on currency intervention and with the G7 meetings around the corner Japan may not be too eager to act on their statements before then, so it still may be a while before we see any intervention from Japan.
Talk amongst analysts would also indicate that Japan will be hesitant on following through on their word, unless the currency starts moving towards the round number of 100 against the dollar. This would be a logical thought process from a technical point but unless Japan step forward with an outline of their actual intensions, it is still unclear as to what their parameters are.
Either way, if you are currently in a USD/JPY trade or are thinking about it, you should make sure your account is in good health as the next few weeks might make this pair very volatile.