A big news this Tuesday night (here in CA) and Wednesday morning elsewhere in the world, the Bank of Japan directly intervened in the currency markets, selling Yen to stop the Yen’s rise that’s hurting their trade and thus economic recovery. Reuters said:
” The dollar extended its gains after intermittent yen selling and was up 2 percent on the day and nearly two yen above a 15-year low. But it was unclear whether Prime Minister Naoto Kan’s government had the stomach for a prolonged campaign similar to Japan’s last foray into foreign exchange markets in 2003-2004.
Finance Minister Yoshihiko Noda confirmed the intervention, saying Tokyo was also communicating with authorities overseas but indicating that Japan acted alone.
U.S. officials at the Federal Reserve and the Treasury declined to comment immediately about Tokyo’s action.
Noda would not say whether the authorities were buying dollars in the first intervention since March 2004, but two traders said the Bank of Japan appeared to have bought dollars around 83 yen at the start of the action.
The Bank of Japan acts on behalf of the Ministry of Finance in currency intervention.
“We will take decisive steps if necessary, including intervention, while continuing to closely watch currency market moves from now on,” Noda told reporters at a hastily arranged news conference.
The dollar had hit a 15-year-low at 82.87 yen earlier in the day but was at 84.78 yen by noon.
Prime Minister Naoto Kan’s government has been trying to talk down the yen but until Wednesday had stopped short of intervening in the markets, apparently worried that acting without Group of Seven partners would not be very effective. “
This is bound to cause big waves in trading around the world on Wednesday. Raymond Anselmo, aka @RiskCap on twitter & Forex moderator on Hamzei Analytics’ HFT, tweeted this chart of the USD/JPY currency pair (and that is why traders should always use stops! talk about in-your-face-ness…):