JPY: The Crocodile Dundee effect – Commerzbank

The possible BoJ intervention in the market on Friday was mostly unsuccessful. On Wednesday, the situation was very different. It very much smells like the BoJ traders had their fingers in the pie on Wednesday too, Commerzbank FX analysts Ulrich Leuchtmann and Michael Pfister note.

BoJ last intervention seems successful

“Readers of my generation may remember the movie Crocodile Dundee. In particular, the scene in which Paul Hogan says: ‘That's not a knife, THIS is a knife!’ This saying came to mind when I read that the daily balance reports of the Bank of Japan (BoJ) suggest that it not only intervened last Thursday (THIS was an intervention!), but also last Friday. In Hogan's sense: ‘That was not an intervention!’”

“The result of the possible intervention on Friday was more than modest. Yesterday, on the other hand, the situation was very different. In the general weakness of the USD, the USD/JPY movement stood out in particular. It very much smells like the BoJ traders had their fingers in the pie yesterday too.”

“If USD/JPY is already sliding due to a bout of general USD weakness, a round of intervention seems promising because in a phase in which the market is searching for a new equilibrium based on new information, interventions change this search process.”