Japanese Yen Big Loser on Bank of Japan’s Intervention Treat

The Japanese Yen was the biggest loser following news that Bank of Japan members were ready to take action following impressive Yen appreciation. Traders pushed the Japanese Yen to extremes not seen in over a decade, prompting the Bank of Japan to hold an emergency meeting with not-so-subtle implications that it regarded Japanese Yen strength. Given deflationary headwinds and a strong dependence on export industries, Japanese officials are clearly opposed to excessive currency appreciation and Bank of Japan Minutes showed that “many” members agreed “the bank would maintain its stance of responding promptly to changes in the market situation.” The fairly clear threat of intervention kept the USDJPY above the 85.00 mark, and we suspect that similarly direct BoJ rhetoric may keep the USDJPY from dropping too far below 90 through the foreseeable future.