Thursday, August 4, 2011

Banks Analysts comments on BOJ intervention

Mizuho: it was the right timing to step in taking into account the weak manufacturing PMI data and due to the fact that after Switzerland’s action yesterday there was a risk that yen would have extended gains alone.

UBS: it’s not clear whether the intervention is designed to slow the yen's gradual advance or to defend a line in the sand. Any attempt to encourage a reversal of the yen's multi-year uptrend will fail. Japanese Finance Minister Yoshihiko Noda has already noted that the nation’s monetary authorities may use the tactics deployed in 1995 that involved an eight-month campaign of sporadic and sometimes daily interventions. So, investors should be ready to more active steps of the BOJ.

Westpac: historical experience allows assuming that the BOJ action will support USD/JPY for a few days maximum, but won’t be able to change the general downtrend.

RBS: monetary authorities won’t be able to change USD/JPY downtrend. US dollar will remain weak due to the concerns about American economic slowdown and expectations of more quantitative easing by the Federal Reserve.

Societe Generale: the BOJ aims for new range and not for trend reversal. Yen is driven primarily by falling US yields. It’s good for Japan that taking into account US debt issues American yields can't fall much further. Today’s intervention may help dollar to get firm support at 76.00. However, in order to return to the levels in the 80.00 area the outlook for Fed’s rates, not for BOJ ones, has to change.

Citigroup: BOJ may have greater resolve than in March or September. The pair USD/JPY is facing resistance in the 79.50/80.00 zone.

Credit Suisse: intervention can’t be called successful until yen gets below 80 against US dollar.

daily usdjpy 14-00

Chart. Daily USD/JPY

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