Archived IMT (2008.10.28)

Yen tanks on rumors of Bank of Japan rate cut as early as this Friday. I have long argued this week that the main reason yen-selling intervention would not be successful as long as japan does not cut interest rates. Recall, Japan did not take part in the global rate cuts from Fed, ECB, BoC, BoE and SNB. The BoJ story aas well as today's stock rally are contributing to the yen's woes, as well as the to sharp gains in GBP, EUR, AUD, NZD, and the overall USD decline. A 50-bp rate cut by the Fed combined with BoJ easing will help address the rising cost of global capital. These developments are taking part despite the 38-point drop in US consumer confidence reaching an all time low of 38. GBPUSD resistance extends to $1.5850, but prospects of 50-bp BoE easing next month maintains any GBP gains as selling opportunity. USDJPY resistance pushes up towards 97.90 yen-- 61.8% retracement from last week's high.