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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / The Yen is getting more expensive again. Overview for 11.05.2016
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The Yen is getting more expensive again. Overview for 11.05.2016

In the middle of the week, the USD/JPY pair is under pressure again after a slight recovery.

The Japanese Yen is “spoiling for the fight” again. “Bears” became more intense in the USD/JPY pair again; in recent days, it is happening fast and aggressively. The current quote for the instrument is 108.64. The May's low is at 105.51.

With a lack of any important statistics, talks about possible interventions of the BoJ became a new tool for speculations in the USD/JPY pair. This week, the Minister of Finance, Mr. Aso, left open the possibility of interventions if the Yen becomes more volatile than usual. This refers to the growth of the Japanese Yen rate and, expectedly, this issue worries the Minister.

Earlier, there were other Japanese financial politicians, who said that interventions might happen if the Japanese Yen would keep being unstable. However, all these talks haven’t come to reality. Moreover: in 2008-2009, the BoJ learned by experience that burning a great amount of funds to accommodate speculative traders was not effective. Interventions intended to prevent the Yen from strengthening aren’t working as wished.

At the same time, it’s quite clear why the Yen strengthening is making local authorities feel nervous.  It is getting more difficult to increase the inflation due to the long-term tendency of the Yen strengthening, and the measures for making the economic growth more active are not so viable as they might be if the local currency was weak.

Perhaps, the USD/JPY pair might be quite volatile for a little while – until the BoJ takes new aggressive measures, or until the USA FRS starts increasing the rate, as it was said earlier. Both variants will make the Yen retreat.
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