The USD/JPY pair is still at its local ”bottom”, but the sales slowed down because of verbal interventions.
On Friday, the Japanese Yen stopped growing as fast as it did during the week. After verbal interventions from the Japanese Ministry of Finance, the Yen stabilized in the pair with the USD. The current quote for the instrument is 104.28.
So, on Friday morning, the head of the Japanese Ministry of Finance, Tarō Asō, noticed that the currency market was witnessing one way speculative movements, which might make the country’s authorities act more actively if necessary. Such comments are caused by a sharp strengthening of the Japanese currency this week: the demand for “safe haven” currencies is increasing in anticipation of the British referendum. It’s obviously that the market would like to “spend” this volatile time in one of them.
This is why the Japanese Yen isn’t retreating right now, although at another point of time it would reverse immediately. The market does not encourage the correction in the USD/JPY pair, because investors have no more place to hedge their risks – only the US Dollar and the Yen.
On top of that, neutral decisions following the results of the BoJ meeting in June make the Japanese Yen more stable. If the Bank of Japan had moved further and made the rates even more negative, it would have allowed the Yen to retreat. However, at this precise point in time the regulator considered it unnecessary.
The Brexit referendum is going to take place in less than a week, but the Yen will remain a “safe haven” currency no matter what the Japanese authorities say.
RoboForex Analytical Department
Without authorization, you can view no more than two reviews per day and no more than 10 per month. To continue reading analytical reviews, register or login to your Members Area.