The move by Standard and Poors to cut Japan’s rating to the fourth highest grade at AA- has not had much impact on the FX market. USD/JPY briefly rallied to 81.75 but has since slid back to mid-range.

The Japanese government has yet to announce how it plans to fund the rebuild after the earthquake and this S&P decision will not make it any easier for a Japanese government already saddled with long term debt.

None of the events in recent months are likely to have a favourable long term effect on the JPY and I remain in favour of a long-term buy-dip strategy in GBP/JPY and AUD/JPY.