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’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.
The FX market is now through the looking glass
It seems ingrained in the FX market that rate rises are currency positive, but this has not always been the case. In an environment where inflation is problematic the market asks the question – is the central bank ahead or behind the curve?
Those are the opening thoughts of HSBC’s in-house FX guru David Bloom and team on Monday.
Japan: land of rising contrasts
Oh dear.
From Bloomberg on Thursday:
Japan’s top government spokesman said the country’s fiscal situation is “approaching the edge of a cliff,” underscoring Prime Minister Naoto Kan’s call for a national debate on raising the 5 percent sales tax.
Unpredictable (Korean) geopolitical risk, illustrated
Abrupt fighting over in Korea is not what the market would have wanted right now:
Related link:
North Korea fires on South Korea – live coverage - The Guardian
Currency war goes covert
Ding dong, the dollar’s dead — against its Asian and Antipodean counterparts, anyway.
That’s the USD reaching parity with the Australian dollar this Tuesday.
Indeed the US currency has even been weakening against its basketcase continental cousins — the Great British Krona and the euro — ahead of Wednesday’s probable QEasy announcement from the Fed.
Go on, Treasury: buy dollars
What’s the best way for the US to show commitment to avoiding currency belligerence after pledging its faith at the latest G20 summit?
Answer, courtesy of BNY Mellon’s FX strategist Neil Mellor: it should buy dollars — and help weaken the yen.
Yen is envy
Everyone laughed at the Bank of Japan when it prepared a big foreign exchange market intervention in September, against a strengthening yen.
Maybe we shouldn’t have. And maybe we should start watching what the BoJ’s example might inspire in the strengthening euro.
Nikkei 63,000,000
And to think the market shorthand has always been Japan = deflation.
Trust Société Générale strategist Dylan Grice to think of the Japanese future a little, um, differently. From Friday’s Popular Delusions note:
A yen for history
‘I can’t go on. I’ll go on’. That would appear to be the Bank of Japan’s Beckettian motto, as the yen hit a 1995 high against the dollar with no intervention in sight on Thursday (chart via Reuters):
We’re well under September’s Y82 intervention level now.
What’s really going on in Japan?
Perhaps it was the heady rush that comes with taking long-promised action — that nearly-forgotten thrill for Japan’s oft-derided central bank and finance ministry officials that comes with boldly intervening to curb the currency.
Bank of Japan-baiting
The dollar just went for a trip under Y83 on Wednesday — taking it below September 15′s level when the Bank of Japan intervened, but not for long:
And no sign of the BoJ veering back into the market.
QE wars, Japan edition
You may have heard that China has launched a new mission to the Moon.
But what no one seems to have told the market — or a Federal Reserve pondering further quantitative easing — is that Japan has quietly staged a landing on Planet Zirp in the meantime.
What price Tokyo’s (first round) of intervention?
The details of Tokyo’s first yen intervention in six years have emerged from the Japanese finance ministry.
As Bloomberg reports on Friday, Japan sold Y2,120bn in the month through to September 28 in a bid to weaken the yen after it rose to a 15-year high on September 15.
Yes, the yen is up – or the dollar is down
We know this is getting repetitive, but well, yes, the yen — was back on the rise, or rather, the dollar was showing renewed weakness on Thursday as the Japanese currency headed for its highest level since Tokyo’s September 15 intervention in currency markets.
Japan intervention watch
So much for Tokyo’s big, bold, intervention move. The yen rose further on Wednesday to Y83.50 before settling (temporarily no doubt) at around Y83.60.
That marks its highest against the dollar since Tokyo intervened on September 15 to try to curb its strength.
25 interventions in a one week band
Ben Davies, CEO of gold hedge fund Hinde Capital, made an interesting point on the subject of currency intervention in a recent letter to investors, as picked up by the King World News blog.
He alludes to the writing of Henry Hazlitt,
Yen intervention redux: did they or didn’t they?
The yen suddenly weakened again on Friday – after four days of fairly solid gains – igniting the FX intervention rumour mill (again):
This despite a rather curious form of denial by Japan’s vice finance minister Fumihiko Igarashi on Friday afternoon,
More yennery: What next?
In the tsunami of commentary triggered by Tokyo’s move on Wednesday to intervene in currency markets to curb the yen’s rise, some views of its implications strike us as more cogent than others.
For example,
Inflation and the BoJ
The narrative that emerged on Wednesday about the Bank of Japan’s intervention is that it was done for two reasons: devaluing the yen against the dollar to boost Japan’s export industries, and — because the bank wasn’t sterilising the yen sales — to give the economy an added inflationary bump.
What next for the yen: ‘A lot of fake movements’
Here’s the latest on Tokyo’s long promised (or should that be, threatened) intervention in the FX markets, as of about 6pm Tokyo time (10am BST).
The Bank of Japan is said to have sold a total of about $11-$12bn worth of yen into the market on Wednesday to buy dollars,
Japan intervenes — at long last
Japan on Wednesday finally intervened in the foreign exchange market for the first time since 2004, bringing the yen to as low as Y85 to the dollar after it reached Y82.88 early in the day.
The move followed weeks of pledges to take “appropriate action”
Japan: Hold the ‘Kan can’ jokes please
So the fat lady has sung – or rather, the sumo wrestler has grunted – and Japan’s latest political circus is over (for now).
Naoto Kan has retained his somewhat battered position as the country’s prime minister,
Charts du jour – FX edition
Parity for the Swiss franc:
Meanwhile, the US dollar has fallen to a 15-year low against the Yen:
And sterling has picked up in the wake of Tuesday’s stronger than expected inflation data:
Kan’s still Japan’s man in land of the rising yen
Such is the state of Japanese politics that it’s big news these days to be able to report that Japan’s prime minister is still Japan’s prime minister.
Naoto Kan on Tuesday afternoon fended off the most serious challenge to his hitherto short and intense leadership of the ruling DPJ from the controversial Ichiro Ozawa.
China, Japan and the intervention two-step
At last, a chance for browbeaten Japanese finance ministers and bureaucrats to recover some mojo — and blame someone else for the yen’s seemingly irrepressible rise.
After yet another dismal round of promises by Japanese officials to act to curb the currency,
Adventures in FX intervention
Now, even by Japanese central banking standards, this… is weird.
Via Citigroup’s FX wire on Wednesday:
Apparently, the BoJ has been carrying out what a colleague calls “mock dry runs/drills in intervention”
FX intervention day?
Moves on different sides of the globe suggest something could be afoot in currency markets.
The yen resumed its climb, advancing on Wednesday to a fresh 15-year high against the dollar of Y83.32. Meanwhile,
Mining taxes, yen rates — or, when politics matter
The uglier – and in some cases, the more ridiculous – a country’s politics become, the more serious become some of the issues.
At least, that would seem to be the lessons from Australia and also Japan,