IMF: Japanese Yen Overvalued, Sympathetic To FX Intervention


(JP) The IMF commented on Japan saying that the BOJ will not be able to reach 1% inflation target until 2017.

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(JP) Yen currency moderately overvalued. IMF is sympathetic to Japan’s views on the need for foreign exchange intervention to smooth out sharp market moves.

(JP) IMF also encouraged the BoJ to take further easing measures to help overcome deflation.

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How to interpret these headlines?

Since the ninja like move that Japanese Finance Minister Azumi pulled last Tuesday (June 5, 2012), market has been softening its JPY holdings on the possibility of a joint FX intervention on the Japanese Yen…  As a matter of fact, despite of the sharp corrections in the Euro on concerns of triggering a CDS over Spain’s Banking Aid (i.e Spanish Bailout), JPY were able to remain put, especially considering its safe-haven status.  With today’s comments from IMF, I believe JPY may remain relatively range-bound, with the next potential breakout direction to the downside (or upside on USDJPY).

Also considering the fact that China has surprised the market by cutting its benchmark interest rate last week, along with Bernanke’s testimony that disappointed speculators that were looking for another round of quantitative easing, I believe USDJPY could move above the 80.00 level shortly.  As a matter of fact, I am looking at the psychological 80.00 level as my buying point for the USDJPY pair as technically USDJPY won’t meet any significant resistance until it hits the 84.00 area… and of course, if BOJ chooses to implement further easing measures as recommended by IMF (and everybody else), then JPY could trade much lower…

In short, I won’t be shorting on any JPY crosses now (such as selling EURJPY, GBPJPY, AUDJPY, etc…).

 

FUNDAMENTALS
Forex Weekly Outlook May 22 ~ 26, 2017
Forex Weekly Outlook – May 15 ~ 19, 2017
Japan’s below zero rates complicate BOJ’s efforts to kick-start growth, end deflation
BOJ cuts key interest rate to -0.1%, will cut lower if needed
Central banks cannot keep pumping cheap credit into series of asset bubbles
About Henry Liu

My name is Henry Liu and I am a Forex Trader and Mentor. I help traders achieve consistent income trading Forex while spending less time trading. My focus in trading is a combination of Fundamental Analysis, Technical Analysis, and Market Sentiment. Far too many retail Forex traders concentrate on just one aspect of trading, technical analysis, and ignore everything else; it is my goal (and vision) to educate every trader on how to take advantage of news trading and become more balanced traders.

You can find more information about me on my Google Profile.

Comments

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  2. Hilkiah says:

    Hi Henry,

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  3. Tuyen LP says:

    Hi Henry,

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