7
2010
USD/JPY Primed to Test August Lows
The USD/JPY looks prepared to test August lows as investors snap up the Yen again after the BOJ kept its monetary policy unchanged. Shirakawa and the BOJ refuse to buckle as the DPJ and exporters apply pressure with a historically strong Yen eroding corporate profits. Relative inaction from the BOJ gives bulls little confidence and at this point anything short of full intervention won’t snap the USD/JPY’s downturn. On the other hand, if fundamentals in the U.S. turned around then investors would gain more confidence in the risk trade and feel comfortable buying back in the USD/JPY. Until then, the USD/JPY seems stuck between a rock and a hard place. Japan has a data set on the way tomorrow, highlighted by core machinery orders. If Japanese fundamentals underperform this may entice the BOJ to take more action. Hence, it will be interesting to see whether core machinery orders can stay positive and surpass growth expectations of 1.9%.
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Posted by: Matthew Myers
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