Dollar/yen opened the U.S session at 96.89 (8:00 am ET) and traded in a 96.55 to 97.30 range, with most of the price movement in a restricted range between 96.70 and 97.10 for the entire morning, through the London close until 1:30 pm. The recovery in the euro from 1.3233 just after the New York open and general dollar weakness over the past several days prevented any serious recovery in the dollar despite the Japanese government campaign to weaken the yen. The 100 day moving average at 96.58 also provided support.
The dollar/yen had been offered in Asia and London, primarily on dissapointment with lack of additional measures from BOJ Governor Kuroda to support the Japanese government bond market. The yield on the 10-year JGB rose to 0.89% in Asia.
At 1:30 pm a Nikkei wire service report that a Financial Servics Agency (FSA) may require investor losses for Japanese banks in line with Basel lll requirements pushed the market through stops below 96.50 down to 96.00. A brief recovery back to 96.50 and then the fall from there triggered stops below 96.00 to the day's low at 95.60 just after two o'clock. Japanese equity futures dropped to -380.00.
Liquidity was very poor in the afternoon but the major problem for the dollar/yen was the seeming lack of support in the JBG market from the Japanese Government and the BOJ. The current currency and equity markets are completely creatures of government intervention, and if that falters traders are likely to think hard and fast about taking profits.
The late afternoon market consolidated around 96.00 awaiting developments in Tokyo.