Nomura: there is 'high chance' for the Japanese government to intervene if dollar-yen surpasses 152

Yesterday’s changes in Barber Interventional label from the Museum of Finance was quite different from the previous comments from the museum finance and especially yesterday Finance Minister Suzuki said that more is going to take bold action when necessary and this board or decision is quite different from a previous his comment just saying appropriate action. So this changes from appropriate to bold or decisive is a clear upgrade in a public intervention level in our view and. Regard, I think interventional risk has clearly risen since yesterday and I would say if try and breaks 152, there is quite high chance for the government to intervene in the market. So not disability below 152 yet but above 152. We should see a real danger of the intervention by Japan’s authority now. But if we see that intervention, you would have to assume that it comes by the way of selling off treasuries and then. Unless you let the Japan yield curve run higher, you’re going to still have those yield differential concerns. Not to mention that we still have a very different M2 supply dynamic in terms of. Currency in Japan versus what you have in the United States just on a relative basis. So is it going to be effective in your mind? Is it all speculators that are driving the CN weakness? I think it’s true that the intervention alone cannot change the trend on the end weakness probably, but still I think currently the positioning which is cute and short at the moment and position unwinding is possible when more intervening in the market and also due to concerns over intervention. I think productivity in FX market can be higher, especially when more actually intervened in the market and the higher volatility is not that good. Good for character type and selling positions and that can be also a reason for some and buy back as well and also as you mentioned previously. We had a three party meeting yesterday both more FSA and the BOJ joint and they agree that volatility or volatile market movement is not good for Japanese economy. And in this regard market will assume that Bank of Japan could be more hawkish if some of intervene in the market and that can be also a reason for some position unwinding as well. So again I may not say intervention alone can change the trend weakness but. More on the government can buy some time and over the summer not only the BOJ but the federalism side can be somewhat negative. Good that I am so I think. That will be a potentially a good strategy for the more to say have a stable, but there are for the next 2-3 months by the intervention action.