Japanese authorities are again threatening intervention. Displeased with strength of the Yen, Tokyo is becoming more vocal on the subject. There were some reports about possible coordination with the FED, but the BoJ would do it alone if needed. The JPY weakened considerably, also pressured by news that SoftBank wanted to make a substantial purchase of Sprint-Nextel. However, when we look at previous interventions in this currency, they typically took place after a prolonged period of threats. Chances are, the BoJ will not take direct action just yet and will first try to scare markets into cooperation (selling the Yen).
The Australian Dollar had a positive day, with most gains following the release of employment data. These numbers were just as puzzling as figures from the USA on Friday, only with different twist. While the economy created 14.5K new jobs, beating the forecast of 3.75K, the Unemployment Rate somehow increased to 5.4% from 5.1% a month ago. I will will the math of this for somebody else to figure out. More importantly, the strength in the AUD spilled over to other currencies, in particular the Euro, which staged a good size rally of its own.
The Japanese central bank may or may not intervene in its currency, but some of its pairs suggest that the yen is about to get stronger. In case of the NZD-JPY, a possibly good selling point is under the support of 63.53 on the 4H chart. If that happens, I want to be in at 63.47, targeting 100 pips. Meanwhile, I will look for breakouts from tight ranges in early London trading, using mostly USD pairs, in a manner consistent with last Friday.
Mike K.
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