The U.S. dollar fell to the lowest level against the Japanese Yen in more than 7 months following the latest comments from Japanese Finance Minister Fujii who reiterated his unwillingness to intervene in the currency market unless levels become “abnormal.” According to former MoF Chairman Eisuke Sakakibara, also known as Mr. Yen, the Japanese government may not step into the markets until USD/JPY breaks 80. In our opinion, even though Fujii has proven to be more supportive of a stronger than weaker yen, political pressure on the new government may force them to intervene prematurely. As soon as USD/JPY breaks its 14 year low of 87.14, we will be looking for signs of intervention. Meanwhile, the sharp drop in USD/JPY has dragged all of the other yen crosses lower. If there are any disappointments in economic data next week, the selling could accelerate. Technically, there is no major support in USD/JPY until the 14 year lows. Aside from the barrage of data from Western nations, Japan also has its share of key reports. The most important release in the coming week will be the third quarter Tankan report - business confidence is expected to improve thanks to the global recovery. Retail sales, small business confidence, industrial production, household spending and the jobless rate are also due for release.Fx360,Kathy Lien
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