Some kind of deal was probably made on Tuesday night, it hasn't been announced yet. Lawrence Sumner, who is in charge of all foreign currency intervention, suddenly was on a plane to Japan.
With him was the head of the NY federal reserve. Before they left, there was a long chat with Clinton and Hashimoto. What has happened no one quite knows. There is a G-7 meeting of the deputy finance ministers this weekend and that had the impact of intervention, that's how the market felt yesterday. We'll have to see what comes out of it. In the short term it is supporting the Yen, from 146 on Monday to under 134 today. If we stabilize Asia, it could give us a boost in the US stock market. But then if they don't do all of the things that they say they are going to do,
then worldwide markets will pay the price. That could be one of the fundamental reasons to turn the market around that would justify the technical picture.
The dollar doesn't have much downside here, having dropped sharply from the 102 area. We can only get intervention for a certain period of time. If we see some fundamental changes in Japan, that could help. In the short term, not very bearish on the dollar. Intervention only works for a short period unless you get some structural changes. |
