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A few pundits are calling for a currency intervention as the $/yen cross is fast approaching the critical 150 level!

$/Yen MOF Suzuki

Unease is also evident in market reactions to intervention talk today:

• In Japan, Finance Minister Suzuki expressed “concern and urgency” about the currency, even with Prime Minister Kishida engaging in a public Japanese yen (JPY) discussion. However, the market response was relatively muted.

• During the late Japanese trading session and the start of the British and European sessions, Suzuki made a second round of comments on foreign exchange. This led to a short squeeze in JPY futures, with a significant increase in the notional volume of $416 million.

As noted by Weston Nakamura, keep an eye on this: The recent upswing in USDJPY is mostly driven by asset managers, while leveraged funds are cautiously reducing their net short positions, even as the risk of Japanese intervention looms large. Hedge funds, on the other hand, are still holding a net short position on the Japanese yen, but their gradual retreat from these positions is tempering the potential impact of a sudden, sharp short-covering rally if Japanese officials decide to step into the market. (Investors Positioning in the Chart below)

JPY HF and Asset Managers Positioning

I am really convinced that currency intervention is not the right strategy! It is just a losing game! It is clearly High Time for the BOJ to abandon its zero rate policy even in the face of recent attempts to ease pressure on rates, as suggested by the following comment: Former BOJ board member Sakurai suggests that the BOJ might delay the end of negative interest rates until approximately April next year.

The time is ripe and the time is N.O.W. for the BOJ to act on rates! The more they hold rates now, the more they have to hike later!

Let’s pay close attention to this because this policy shift is poised to have ripple effects on global rates, possibly marking the last sell-off capitulation wave 🌊 that creates the BIG buying opportunity for rates! But hold your horses 🐎, NOT yet, BOJ capitulation remains the last puzzle piece in the rates equation!

I think it is coming soon! #InflectionPoint Giorgio Vintani Tom Baldacci hashtag#japan hashtag#rates hashtag#currency hashtag#bonds hashtag#boj hashtag#fed chart by #TradingView

InflectionPoint

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