Greater London, England -- (SBWIRE) -- 09/16/2010 -- Neil Looker, Chief FX Dealer at spread betting company City Index (http://www.cityindex.co.uk), commented:

“Currency volumes have been very high today with traders taken by surprise by Japan’s move to buy US dollars and sell Yen in its first intervention for 6 years to weaken the Yen. The speculation is that an estimated $18 billion was bought by Japan and this immediately charged the dollar higher against the Yen.

There had been speculation in Europe that Japan could continue to intervene to weaken the Yen further during US trading hours and the last few hours has seen media sources speculate that this indeed was taking place.

The initial intervention moved the dollar/yen 3% higher from 83.00 to 85.50 with the Nikkei showing a positive 2% gain.

Clearly the 82.50 level is the line in the sand for the Bank of Japan where they feel enough is enough and there are many who have been taken a bit aback by the speed of Japan’s intervention, particularly as Prime Minister Kan was not seen as a massive ambassador of intervention when compared to his rival Mr Ozawa.

The market has already started making comparisons between the Bank of Japan and the failure of the Swiss National Bank to curb the Swiss franc’s appreciation.

However, there are stark differences between the Yen and the Swiss with many traders using the Swiss Franc as an alternative to the Euro with solid fundamentals against a debt ridden Europe with sovereign difficulties.

After Kan’s victory in the DPJ election over the pro intervention Ozawa, last night’s action could be seen as more of a political move to boost support from the exporting community. That said, the market is sceptical in the fact this intervention was taken by the BOJ on their own and with what seems a lack of support for co-ordinated intervention from other central banks. Traders are unconvinced that they can keep the Yen on the back foot for too long without co-ordinated action from other Central Banks.”

For more on currency spread betting at http://www.cityindex.co.uk/range-of-markets/Currencies-Spread-Betting.aspx

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