The game behind BOJ intervention, USD vs JPY

[tsfx]

Hey,

So markets collectively seem to be in this waiting game to see whether BOJ is having 150 as the ceiling price of USDJPY and at the same time anxiously waiting for that free money the central bank will give to every trader that is long the JPY. And there are plenty. Every sentiment gauge is telling that everyone is max long JPY.

But why is BOJ referring to the weakness of JPY while it's actually the strength of the dollar?

Look at the attached chart. If you remove USD from the equation and just look at the JPY against other majors you'll notice that JPY has actually been flat for over 5 months now. It's the USD that has gone straight up.

So, that's just an alternative look at things. If you want to be short USDJPY, just be short USD somewhere else, say against a high yielder like GBP or NZD. In that way you don't lose -5% + broker mark up while waiting. It's the USD, stupid. Cheers.

 

[TrAndy2022]

What was that 1 minute mini crash USDJPY today ? Again a fat finger or real USDJPY sold by BOJ, opinions on that ?

 

[SunTrader]

Sumtim happened - it only took 9 ticks for it to move 485 pips, then back:-

 

[tsfx]

What was that 1 minute mini crash USDJPY today ? Again a fat finger or real USDJPY sold by BOJ, opinions on that ?
View attachment 325385

There is no fat finger "accidents" in fx trading.

MM's/liq providers backing off from bids is what is causing this. One can only speculate why this happens but pretty sure it has everything to do with the fact that market is massively short, so MM's are long, so they cause volatility to get out of this (very simplified explanation). That's why the market wants to gun to new highs to FORCE BOJ into action. it's the volatility that matters not direction.

 

[tsfx]

Sumtim happened - it only took 9 ticks for it to move 485 pips, then back:-

View attachment 325391

You mean 48,5 pips. Yeah, backing off from bids/asks is what is causing this. Not heavy selling.

 

[SunTrader]

You mean 48,5 pips. Yeah, backing off from bids/asks is what is causing this. Not heavy selling.

Ok, so I should have said micro pips. Been long time since I traded either forex or currency futures.

 

[tsfx]

Here's a chart analysing the last time BOJ interviened. Exactly a year ago.

What's odd is that exceptionally conveniently there was a subsequent drop in the dollar AND a drop in the US bond rates as well making it rational for the USDJPY to drop even without the intervention. Why? Because UJ is a proxy for 10 year yield, so they move together most of the time.

So, my question is: was it really a JPY intervention? Or was it some sort of collective intervention by several central banks to cause the dollar AND the bond rates to reverse.

I refuse to believe that BOJ's intervention in the JPY alone was what changed ALL the markets AT THE SAME TIME. Who knows though...

 

[gabriella]

Here's a chart analysing the last time BOJ interviened. Exactly a year ago.

What's odd is that exceptionally conveniently there was a subsequent drop in the dollar AND a drop in the US bond rates as well making it rational for the USDJPY to drop even without the intervention. Why? Because UJ is a proxy for 10 year yield, so they move together most of the time.

So, my question is: was it really a JPY intervention? Or was it some sort of collective intervention by several central banks to cause the dollar AND the bond rates to reverse.

I refuse to believe that BOJ's intervention in the JPY alone was what changed ALL the markets AT THE SAME TIME. Who knows though...

View attachment 325462

Regarding the potential intervention in USDJPY, do you believe that the drop in USDJPY was solely a result of the BOJ's intervention, or could it have been influenced by a collective effort involving other central banks? What factors do you think might explain the simultaneous movements in USDJPY and US bond rates?

 

[tsfx]

Regarding the potential intervention in USDJPY, do you believe that the drop in USDJPY was solely a result of the BOJ's intervention, or could it have been influenced by a collective effort involving other central banks? What factors do you think might explain the simultaneous movements in USDJPY and US bond rates?

 

[tsfx]

The way the market tries to tell you that there's a ceiling at 150, so that you keep accumulating short positions and put stops above this level (chart attached)

I wonder how many remember the Swiss central bank intervention intention in EURCHF back in 2015.

When you're short you can't use stops now, because if it blasts through it can leave a nasty gap up. 152 was the last time there was an intervention so keep an eye out for that level as well.