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’The currency pair league table
$/€ races ahead of $/£, $/¥ and $/SFr, but $/AUD has made a strong run from behind…
Actually, the thing that jumps out from Table 4 of the most recent FX trading survey from London’s Foreign Exchange Joint Standing Committee is that none of the columns — April 2011 thru October 2011 — are ranked consecutively.
Inter-yention — it’s back
After the Japanese yen hit a record high of ¥75.311 against the dollar on Monday morning, the BoJ/Japanese government jumped in, selling an unspecified amount of yen which brought its valuation down about 5 per cent against the dollar and 4 per cent against the euro:
Asia update: It’s getting grimmer
Firstly, the Chinese official inflation figures for July came in higher than expected: 6.5 per cent compared with an average forecast of 6.3 per cent in Reuters and Dow Jones polls — the highest monthly increase for three years.
Inter-yention action
It’s happened.
The Bank of Japan hit the currency intervention button for the first time since March, which, er clearly didn’t turn out so well:
RTRS-JAPAN FX INTERVENTION SO FAR ESTIMATED AT MORE THAN 1 TRLN YEN -TRADERS
And,
Inter-yention stations
It wouldn’t be a proper dollar panic unless there were rumours, uncertainty and fear that the Bank of Japan is intervening in the yen:
So here we are. Rumour, uncertainty, fear:
Yen moves, reversed…
The Yen, at pixel time trading at 80.02, since the start of April:
As you can see, the appreciation — which has now more than reversed the decline that followed the G7 intervention on March 18 — has been ongoing for roughly a month now.
Yen weakening after initial post-earthquake gains
Details remain hard to come by after the 7.1 earthquake that hit Japan late Thursday night local time, but recent flashes from Kyodo News indicate that its damage has thus far been limited, though a tsunami warning has been issued for the northeast coast where it hit:
BoJ: A more focused ‘QE3′, Japanese style
It might signify the evolution of what some have already dubbed ‘QE3, Japanese-style’ into something more limited but focused on disaster relief and reconstruction. The effects, however, may be felt in markets around the world.
Yen moves
Here’s the movement in the yen since the Japan earthquake on March 11:
And something that crossed the Reuters wire earlier today:
The dollar briefly rose to its highest in more than five months against the yen and gained versus the euro on Tuesday after minutes of the last Federal Reserve meeting showed some Fed officials believed the U.S.
Five reasons the yen will strengthen
Since March 11, analysts in Tokyo have widely predicted that the Japan’s triple disasters – earthquake, tsunami and nuclear plant crisis – would heighten risk averseness among Japanese investors.
Indeed,
Don’t bet on Japanese repatriation
There’s been a lot of talk about how repatriation of funds will affect the yen in the weeks and months to come.
Most believe the flow of funds back into Japan will see the yen strengthen. There are,
The yen and economic fundamentals
How do we know that foreign funds are being repatriated into Japan? Because the yen strengthened against the dollar after the earthquake and until the G7 intervened. Why did the yen strengthen? Because funds were being repatriated,
Watching Japan’s return from Oz
The repatriation effect on the yen is being closely watched by analysts all over the world following the Tohoku temblor and subsequent Bank of Japan intervention.
As most have commented this is on account of the patterns that followed on from Japan’s Kobe earthquake in 1995,
Fallout from a flock of Black Swans
What’s that saying?
You wait for a Black Swan for ages and then three show up at the same time?
Citi FX strategist Steven Englander noted last week — just a few days before Japan’s disastrous earthquake sent asset prices swinging — that “investors are tired of being told to hedge against risks that have not emerged.”
Intervention!
While you were sleeping…
Statement from the G7: (emphasis ours)
‘We, the G7 finance ministers and central bank governors, discussed the recent dramatic events in Japan and were briefed by our Japanese colleagues on the current situation and the economic and financial response put in place by the authorities.
Mrs Watanabe fears a global market dislocation
Talk of Japanese investors repatriating their foreign exchange holdings continues.
And with headlines like “Japan’s Mrs. Watanabe says: ‘hold off on carry trade,” how could it not? Hold the thought,
The derivatives hour for the Japanese yen
Variance swaps strike again!
Did anyone notice that the curious timings in Wednesday yen currency-cross slumps? Societe Generale’s head of currency research, Kit Juckes, certainly did:
Overnight, the news flow out of Japan continued to deteriorate in a high stress environment defined by the 27-40 regime in the VIX.
On top of everything, Mizuho bank is having ATM problems
From Reuters on Thursday:
TOKYO, March 17 (Reuters) – Mizuho Bank said its automatic teller machines failed for a second time Thursday across Japan after a shutdown earlier in the day. A spokesman for the company said its ATM network failed at 0840 GMT,
What’s moving the yen?
The yen reached historic highs against the dollar late Wednesday.
It’s currently hovering around the 79.10 to the USD mark. The chart of recent action is pretty special though. Compared to Wednesday’s drop,
International yen rescue [updated]
Updated (10:04 GMT): Spotted sometime around 10pm GMT, the Yen reaching a record high against the dollar: ¥79.30.
The all-time low of ¥79.78 (set in 1995) is now within spitting distance.
So,
Jefferies: limited risk of TSY selloff by insurance companies
The 1995 Kobe earthquake took place on January 17, but it wasn’t until September of that year that Japanese investors became net sellers of US treasuries:
The graph is from Jefferies (HT Anousha Sakoui),
A quick US morning market round-up
“This isn’t a flight to quality, it’s a flight from disaster.” [Via Bloomberg]
That, from Colin Embree from Bank of Nova Scotia Asia, sums up movements on Tuesday morning.
The S&P was down 1.8 per cent at 1,272 at pixel time.
YoYo-ing yen
Some price action in the yen/dollar exchange rate on Tuesday:
And yes, we already have speculation about the Bank of Japan intervening –though RBC Capital Markets’ Elsa Lignos says it was a computer wot did it:
Don’t compare Sendai quake to Kobe, Nomura FX analysts say
Recent exchange action between the Japanese yen and the US dollar:
It’s a tangled currency web woven largely by insurers.
Risk modeller AIR Worldwide said over the weekend that insured losses could be $14.5bn to $35bn,
Of earthquakes, the BoJ and the ever-resilient yen
As we noted earlier on Friday, there’s nothing quite like a killer earthquake and tsunami to boost a currency — at least, that seems to be the case in Japan where the yen not only recovered after dipping in the wake of Friday’s 8.9-magnitude earthquake and massive tsunami,
Japan’s earthquake markets, then and now
From Reuters’ financial graphics editor, Scott Barber:
And an FT Alphaville version of Friday’s immediate reaction:
Whither that bottom-right graph from the first collection? Here’s a clue.
Yen reverberations
Here’s the yen reaction after the massive earthquake that struck Japan on Friday.
Yes, that’s down against the US dollar and then, erm, up.
What gives?
Here’s a thought coming from some currency traders on Friday.
It’s midnight in Tokyo
…and that must mean the yen is weakening. Interesting observation from Nomura’s foreign exchange analysts:
The secret behind the yen’s outperformance relative to US rates is likely to be found in Tokyo.