USD/JPY has seen a vigorous pop off lows, in what might be some sort of BOJ-induced intervention, if only by having called some interbank dealers asking for a ‘check’ on rates, which usually spooks market makers to withdraw liquidity.
As in other episodes when the declines in USD/JPY have been too heavy, the BOJ official may be trying to slow down the current pace of Yen appreciation. The flash bonces to to have little net effect in price, which usually sees bears re-engaging, despite it serves the purpose of cleaning up some speculative positions.
Vasilis Tsaprounis from Magna FX, notes: “Intervention can take many forms. There’s ‘jawboning’ – talking about a currency to influence the direction. There’s actively going to the market and buying/selling to push the rate and stop a few speculators out (there are different ways of doing this). In between those two there is the simple act of the central bank (in this case the BOJ) calling up some interbank dealers at the banks and asking for a ‘check’ on where the price is. This is often enough to trigger buying (of USD/JPY in this case).”
(Market News Provided by FXstreet)
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