Japan renews forex warnings
The dollar's renewed weakness against the yen as again raised the caution flags within Japan's MoF, as officials issued a slew of warnings. Vice Finance Minister of International Affairs, Zembei Mizoguchi reiterated that forex rates were being closely monitored and prefers currency moves to be stable. FinMin Shiokawa tried to downplay the intervention, saying that the government was not attempting to artificially control rates. Moreover, Japanese authorities have become more inclined to reference purchasing power parity as a desired target for the dollar/yen exchange rate, placing the pair in the 140-150-region. Nonetheless, few in the market doubt Japan's resolve to maintain a weaker yen, as was seen in May in which the BoJ spent a record 3.98 trillion yen intervening in forex. As a result, traders will likely exhibit reluctance in aggressively bidding the pair lower.
Dollar/yen shrugged off the comments, remaining mired beneath the 118-level, slipping to 117.63 overnight. Support is seen at 117.60, backed by 117.10 and 116.75. Additional floors emerge at 116.50, backed by 116.20 and 116. On the upside, resistance is seen at 118, followed by 118.30 - which marks the 38.2% retracement of the climb from 116.18 (May 27) to 119.62 (May 30) and 118.75. Subsequent resistance eyed at 119 and 119.40-50.
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