Hirose Weekly News Update 23 July 2012
<Dollar/Yen>
Net-long yen increased from 8,952 contracts to 11,121 contracts on the IMM but the increase has not been too rapid. Sell orders for Japanese actual demand has decreased from 80's to 79's and now is at about 79.5-79. We believe the Dollar is going to move with minor fluctuations. As Japan MOF announced on its website that it will take a firm decisions, the possibility of actual intervention increases. However, large scale of selling is unlikely to happen.
The market is now afraid of willful intervention from Japan if the dollar slides to 77 against the Yen. If Japan really intervenes at 77, the dollar will rise and make a perfect level for export companies to sell the dollar. Even if Japan does not intervene, the dollar is still heavy from 79.5 so it is better to sell the dollar. However, it is hard to sell below 77.50.
Expected Range: 77.50-79.85 Sell the dollar on rallies