Morning from Europe.

The mayhem in Asian FX continues and it seems like the BoJ&MoF are testing prices and market depth (in both directions) this morning in USDJPY. MoF representative Kanda said this morning that he had “no comments” on whether the MoF had been active already. This is probably a pretty decent hint that they have at least been testing the waters.

The line in the sand is drawn around 160 for now, and depending on whether we see a bit of stability restored in the coming hours, we are tempted to use RKOs above the 160 level to gain cheap leverage. The big if, and it is a big if, is whether the CNY will be devalued this week as well and whether Powell/Yellen will increase the upwards pressure on the USD.

Chart 1: Roller-coaster JPY