Daily Forex Brief | Japan's warning shot may struggle to last

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Daily Forex Brief London: Monday 31st October 2011
Japan's warning shot may struggle to last The overnight intervention by Japan to weaken the yen is not wholly surprising given the recent moves we've seen on USD/JPY. But it's not a situation of yen strength by any stretch of the imagination. Ahead of the currency selling by the BoJ this morning, the yen was the weakest performer on the majors so far this month. More the issue is dollar weakness, which the Japanese economy is not currently in a fit state to deal with. This is the third intervention of the year to weaken the yen, but the impact on the wider view has been limited. Japanese finance minister Azumi is talking tough, blaming speculators and adding that he would continue to intervene "until I am satisfied". The initial impact, coming on the last trading day of the month, has been strong, pushing the yen 4% lower vs. the dollar. However, Japan needs much bigger guns and policy measures to weaken its currency on a sustained basis and unfortunately, it's armoury is looking very depleted.
Also in today's Daily Forex Brief: A time for taking stock Seducing China and the IMF will not be easy, or cheap Merkel the puppet-master of Europe Read more...
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