USDJPY - still no intervention
Asian Pacific indices rallied sharply overnight, although Australia’s ASX 200 moved in the opposite direction on the back of weakness in healthcare and industrials. The Bank of Japan (BoJ) left its key Policy Rate unchanged as expected. But there was some bemusement that BoJ officials seemed relatively unconcerned at the multi-decade weakness of the Japanese yen. BoJ Governor Kazuo Ueda said that there was no reason to act unless moves in the yen have an impact on the economy and prices, that is, inflation. He said that wasn’t the case currently. He did warn that prices were overshooting as a whole. But the release of Tokyo Core CPI suggested the opposite, as it dropped to +1.6% year-on-year, down from +2.4% in the prior month. The yen has continued to weaken overnight against all the majors. The USDJPY is now taken out 157.00, and is significantly higher than 155.00, a level that many thought was the trigger for intervention. Traders are betting that it can weaken further while the BoJ continues to operate such loose monetary policy. But the BoJ could be holding fire, encouraging further yen shorting, so that when it finally intervenes, the effect will be devastating.
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