Japan: Officials must be frustrated from Yen’s strength – BBH

Research Team at BBH, suggests that the Japanese officials must be frustrated as after bottoming on May 5 near JPY105.50, the dollar strengthened to almost JPY111.50 by the end of May. 

Key Quotes

“The dollar eased in the three sessions before the US jobs data.  The yen soared more than 2% against the dollar after the report and reached three-year highs against the euro.  The yen strengthened 4.3% against the dollar last week, and the five-yen move in four days is likely coming close to the Japanese definition of disorderly market.

However, despite the rhetoric that may be rolled out, the fact that it appears to be more of a dollar move than a yen move may dissuade Japan from intervening.  Moreover, the record of unilateral intervention by the BOJ, even when done in size, is not particularly inspiring. 

This week's economic data from Japan includes a likely upward revision to Q1 GDP (due to capex) and a large April current account surplus.  Recall that the March surplus was the second largest in the past two decades.  April is expected to be only a little smaller.  The yen finished last week within 0.5% of what by the OECD's calculation is purchasing power parity.”