Massive Yen Intervention

A squeeze like this does not happen without massive and concerted currency intervention:

Currencies are extremely hard to manipulate as the FX trading volume is substantial compared with equities. We must be outside the 3.0 standard deviation at this point but if you are a subscriber you remember that I recommended everyone to wait for a particular setup and not to step in front of this train.

Anyway, here’s a bit of context in case you care:

The G7 group of major economies has agreed on a joint intervention in currency markets to stabilise the yen after its recent record run in the wake of the country’s devastating earthquake and tsunami.

The G7 announced that its member nations would sell the yen as markets opened today.

“Given yen moves after the tragic events that hit Japan, the United States, Britain, Canada and the European Central Bank have agreed with Japan to jointly intervene in the currency market,” Finance Minister Yoshihiko Noda told reporters.

Japanese authorities will sell yen to buy US dollar in the market today. Other central banks will act when their markets open, Mr Noda said. He declined to comment on the size of Tokyo’s intervention.

“When Japan is in such a state, it’s extremely meaningful for G7 countries to cooperate and take coordinated action to stabilise financial markets,” he said.

Now, what always cracks me up is that there is rarely any hesitation to step in when a currency is on the rise. Anything to keep the ole’ ponzi going. How about this chart?

The fact that the Dollar has lost 37.5% of its purchasing power since 2001 does not seem to be a problem to most bureaucrats. Unless of course you are among the few people out there who actually has to fill up their gas tank, buy groceries, or heat their homes.

From a trading perspective that EUR/JPY spike may be followed by a sweet short trade opportunity once the time is right. And either Scott or I will put up a post as soon as that happens. From a macro economic perspective the inflationary games played by the G7 are nothing but a travesty and, among many other of its activities, it’s killing our respective economies to the benefit of a small connected minority.

It’s just tough to sit by and watch our currency turned into toilet paper. I wish more people would pull up a long term DXY chart instead of complaining about ‘rising prices’.

Alright – enough bitching – back to focusing on the tape.

Cheers,

Mole