G7 Intervention Statement, BoJ Injects ¥3 Trillion, USD/JPY Spikes Back Above 1995 Low

USD/JPY 1995-2011 (FxStreet.com)
USD/JPY (US Dollar/Japanese Yen) fell through a level not seen since 1995 yesterday as banks-traders-portfolios made risk adjustments, unwound carry trades or demanded liquidity (what else), due to the earthquake/tsunami aftermath and nuclear fears. On Monday, USDJPY initially pierced through a symmetrical triangle to the downside, but quickly recovered once the Bank of Japan pumped 15 trillion yen into money markets. Japanese equities also got killed. Post tsunami, the Nikkei 225 Stock Average fell 6% and then crashed 10.55% (14% at the low), and Nikkei 225 futures on the Osaka exchange lost 16.2% at the low. Maybe some fund managers got spooked, via Reuters:
"The monthly global fund managers' survey from Bank of America-Merrill Lynch, conducted before Friday's earthquake, showed allocations to Japanese equities rose to a net 8 percent overweight in the month compared with 4 percent in February."

As a result of the Yen spike, the BoJ injected 6 trillion Yen on Thursday, 3 trillion Yen on Friday, and now the G7 (U.S. Federal Reserve, Bank of England, Bank of Canada, ECB etc) plans to do a coordinated intervention to lower the Yen.

USD/JPY reaction (FreeStockCharts.com)
"FOR IMMEDIATE RELEASE

Thursday, 17 March 2011
20:00 Eastern Time

Statement of G7 Finance Ministers and Central Bank Governors

We, the G7 Finance Ministers and central bank governors, discussed the recent dramatic events in Japan and were briefed by our Japanese colleagues on the current situation and the economic and financial response put in place by the authorities.

We express our solidarity with the Japanese people in these difficult times, our readiness to provide any needed cooperation and our confidence in the resilience of the Japanese economy and financial sector.


In response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the United States, the United Kingdom, Canada, and the European Central Bank will join with Japan, on March 18, 2011, in concerted intervention in exchange markets. As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will monitor exchange markets closely and will cooperate as appropriate." (via Bank of Canada)

The markets loved it. USD/JPY spiked to 82 (currently at 81.39), Nikkei is up 2.72% at 9,206 and TEPCO (Tokyo Electric Power), which owns Fukushima, is up 17% at 940. Risk is on, or short covering, for now. Hedge against another round of black swan warfare, imho. Thoughts?


Tokyo Electric Power Co. Inc (9501.JP) - Bloomberg


Nikkei 225 Index (NKY) - Bloomberg


How does the Fukushima story end? Here are recent links I tweeted. Watch NHK World Live on Ustream with live streaming #fukushima tweets here.
  • "BREAKING NEWS: Japan's nuke safety agency raised accident seriousness level to 5 from 4 (Kyodo)
  • French CEA says, Japan seems to have Fukushima 'under control' (Ran Squawk)
  • Japan radiation localized, no immediate threat: WHO (Reuters)
  • U.S. Nuclear Regulatory Commission: U.S. nuclear officials suspect Japanese plant has a dire breach (LA Times)
  • RT @AsCorrespondent: UN atomic energy chief says Japan is racing against the clock in its nuclear crisis
  • Engineers consider burying Fukushima to block radiation (like Chernobyl in 1986) (France24)
  • Japan nuclear crisis: a 'race against time', says IAEA (Telegraph)

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