Mini-rush to the exits hits dollar
USD/JPY ran through cascading stops as it fell below the US and then early European lows. The pair has virtually given up all the gains on the day and sits at 123.70.
The catalyst was a comment from Japanese Finance Minister Taro Aso, who said recent currency moves were rough and that he will monitor forex moves carefully.
This is what I wrote earlier in the day:
"The enthusiasm after the break of the 2007 high hasn't been what you'd hope for. That's a signal for a small retracement but the trade is to buy the dips, not try to pick a top. There's nothing saying we can't go all the way back to 122.10 before the next rally (it will come if Japanese officials mention worries about yen weakness) but I'd look at 123.00 as a spot to start scaling in," I wrote earlier. That's still my favored gameplan.
In addition, the bond market just won't cooperate as yields are down 3 bps, led by the front end (which is bad news). If commodities begin to rebound, it could be more bad news for the dollar.
