The BoJ intervened in the currency market yesterday during our live Pro Traders Club session. Under the direction of the Minister of Finance, the BoJ appears to have taken a slightly different approach to intervention then the strategies used in the 2002-2004 period. Although the specifics of the intervention are unknown to the market, wire reports of continued but intermittent intervention in the London and NY trading sessions. In historic calls for intervention, approaches were more "one off" injections. Often at times of very thin trading to have most impact. Other approaches included frequent short spikes during heavy volume to shake out speculators. In the case of current JPY selling, it is perceived that the BoJ has committed significant capital for continuous injections to the point of hitting emotional triggers in the market. The challenge is that the power behind JPY buying is more commercial than speculative, which will continue as a sustainable force underpinning the JPY.

Read More...

Tags: JPY

Cross currents have traders clouded on where to focus. Friday's NFP supported risk through the weekend until news reports, calling into question the credibility of the bank stress tests, filtered through the wires causing a EUR sell off. This was accompanied by uncertainty around the Australian elections. It appears the final 2 standing independents figure the mining tax would aid in cutting pollution and serve them well thus lending a vote to the Labor Party for the win. The RBA statement was secondary and AUD pulled back into the comfort zone of the range. Our view for the near term is mixed, at present. We anticipate sideways equities markets and risk-on/risk-off in the near term and feel it will be a traders market. We are buyers of dips on AUDUSD, AUDJPY and EURUSD and sellers of rallies at key levels discussed in Pro Traders Club. EURUSD is potentially forming a nice right shoulder here in the low 1.2700's that may bring a move above 1.3000. We need to see micro price patterns build support at current levels. This will be reviewed in Pro Traders Club. Read More...

Fridays non-farm payrolls report has wiped sweat off the brow of the FED as it buys time to welcome more positive economic data and avoid QE -2 that the market has feared. The NFP report was not as bad as general "economists" consensus had feared. 54K Jobs were lost in the month of Aug. Prices initially spread in favor of USD in thin liquidity while the markets digested the data, but quickly lost ground when non-manufacturing sector showed weakness in the services activity. Following the data, risk continued to dominate as the USD weakened on strong equities.

Equities kicked in and the S&P eventually finished +1.3% higher. US 10y yields climbed 10bps, but fell back to close just below 2.70%. EURUSD traded 1.2804-1.2898 and USDJPY 84.22-85.23. Read More...