Yen strength and the Bank of Japan

Just my opinion, so take it for what it is worth.  I’m seeing a lot of comments from newer traders about how this is a great place to go long the UsdJpy since we are getting close to lows not seen for over 13 years….. that MAY be true.

However, I recommend taking a close look at what is going on with the Bank of Japan and the hands off view they have had as of late.  They continue to state that their main concern is volatility in the currency not strength at this point.  Yes their currency is getting stronger but at a steady rate not with wild swings.

The BOJ seems content to allow the U.S. economy to strenghten over the next few months or quarters.  This will in turn allow a bit of an equalization to occur between the US dollar and the Japanese Yen.

My main thought it to trade what you see and not trade based on some preconceived notion as to what you ‘think’ the market should do.  From a price action stand point, I’m not seeing a lot of reasons to look long, and from the fundamental comments I’m hearing I’m not seeing the Bank of Japan too excited to step in at this point.

Here is a quote from a recent Wall Street Journal article.  “The tone of Mr. Noda’s remarks was similar to that of his comments from last week, and market players said that suggests the MOF is still a few steps away from taking action through the Bank of Japan to curb yen gains.”

All I’m saying is don’t bet the house on the BOJ stepping in….. yet.

TraderCisco