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USD/JPY Approaches 76.00 as BOJ Signals No Intervention

Last updated 2/2/2012 3:46 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

USD/JPY continued to drift lower in Asian trade coming within a few pips of the key 76.00 level after BOJ Deputy Governor Hirohide Yamaguchi said the he didn’t see the need for immediate policy action. USD/JPY has dropped more than 200 points since the uber-dovish Fed meeting last Wednesday during which the US policy makers indicated that they may keep rates low  all the way to 2014. That announcement  frustrated  dollar bulls who had been expecting a break out in the pair on the belief that improving US economic data would temper the accommodative policy of the Fed.

Today’s comments by Mr. Yamaguchi suggest that the BOJ may not immediately intervene near the 75.00 USD/JPY as it has in the past, perhaps because Japanese monetary officials  feel that the country’s business sector had nearly a year to adjust to the stronger yen regime. Monetary authorities in Japan have always stressed that it is the rate of appreciation rather than the absolute value of the exchange level that precipitated their actions.

Nevertheless, despite Mr. Yamaguchi’s nonchalant attitude the USD/JPY pair is approaching key support levels near 75.50 and could trigger a cascade of stops that could accelerate its fall. Therefore, this week’s US economic data which includes the NFP and ISM Services report this Friday could prove pivotal to the near term direction of the pair. If US reports shock to the downside the drop in USD/JPY could prompt a quick change of course from BOJ.  

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.