All of the recent data from the Japanese retail trading sector told us that the average punter was long USD/JPY, EUR/JPY and AUD/JPY. Prime brokers have been telling us that the big hedge funds were heavily long USD/JPY, both in the spot market and through the options market. Japanese exporters were being faced with a USD/JPY rate close to 75JPY and that was really hurting their competitiveness. True some recent futures data suggested that CTAs were long Yen futures, but that is but a miniscule part of the whole equation.
The BOJ action had the effect of giving professional and retail speculators as well as Japanese exporters, a free ride. Little wonder that the BOJ was able to buy $30billion at one rate, 79.20. All of this intervention will be paid for with new money, there will be no sanitisation, so we print more money to guarantee the speculators a good day. I know a lot of our readers made a lot of money yesterday, but this cannot bode well for the future stability of the financial markets.
