Archived IMT (2010.08.29)

DON'T CONFUSE INTERVENTION WITH QE in the case of Japan. Japan's Fin Min Noda made it clear last week that any yen intervention would make little difference and that chances of US stepping in were "zero". So Japan is now moving in the way of further QE as was seen in December when the BoJ's fresh bond purchases placed a cap in the yen successfully (but temporarily). FRIDAY's YEN SELL-OFF was INITIALLY TRIGGERED by a Nikkei News report (early Saturday edition), stating the BoJ may move forward its September 6-7 meeting to next week. The already weak yen was further hit by a positive market reaction from better than exp US Q2 GDP. 90 mins later, stocks fell and yen strengthened temporarily after Bernanke's speech. But as we neared Friday's London close, the yen resumed its broad selloff, closely followed by the falling USD. I've already mentioned the high targets for selected yen crosses in the IMT well before Friday's GDP (all of which were taken out). LOOKING FORWARD, traders will keep the yen pressured as they await Japanese words to tun into policy action (new loans by BoJ). The latest attempts at a fresh political coup against the Japanese PM are also helping to push the yen lower. And the 3rd force likely to weigh on the Jpns currency is a positive Monday Asian equity reaction to Friday's Bottom-Fishing rally. I've already mentioned on twitter last week that 1040 in SP500 served as a key support before and after the flash crash, with the exception of the late June sell-off. Further gains in yen crosses in Monday Asia + Europe will face their test in Monday's US data schedule.