Archived IMT (2010.09.15)

JAPAN INTERVENES in FX markets for the first time since March 2004, acting in solo yen-selling. History is against the Japanese authorities as central bank interventions alone have proven to never completely stave off speculation. Japans last intervention campaign lasted for as long as 2 years and the only reason it ended was because the Fed began signalling interest rate HIKES in March-April 2004, which eventually materialized in June of that year. This is by far not the case today, as the Fed is expected to add a fresh dosage of QE as early as next weeks FOMC meeting. Todays intervention aims at slowing the yens rise will trigger additional yen selling against the currencies most likely to benefit from anticipation of Fed quantitative easing; CADJPY 83.90s and AUDJPY 80.80. USDJPY appears to face 4-month trendline resistance at 85.80s, while GBPJPY faces interim resistance at 132.50-55. We could well see a fresh mix of verbal and real intervention in subsequent days, but the policy realities suggest that Japan would have to intervene for months to successfuly stave off unwated appreciation of its currency.