The Bank of Japan entered the currency market and began interventions in the yen. The report on this came through on November 13 at 21:15 Moscow time.
An intervention is a direct operation by the central bank on the currency market. The regulator itself buys its own currency to stop its weakening.
For a trader, this is a sharp jump in all pairs with the yen, which comes without warning.
How is an intervention structured?
The decision is not made by the central bank itself. In Japan, the order for an intervention is given by the Ministry of Finance, and it is executed by the Bank of Japan.
- Selling dollars - the regulator spends its foreign exchange reserves.
- Buying yen - with that money it buys back the national currency.
- Without an announcement - there is never an announcement in advance; the market learns about the operation from the price movement itself.
What is still unknown?
There are no details in the report. The regulator did not disclose a single figure on the operation.
- The amount of the operations - not stated.
- The levels at which the regulator acted - not stated.
- Official confirmation - comes later, when the Ministry of Finance publishes data on the funds spent on interventions for the month.
Which pairs accelerate?
- USD/JPY - the main instrument under the intervention.
- EUR/JPY, GBP/JPY, AUD/JPY - cross rates that follow.
The yen is the weak spot everywhere at once. The intervention hits it in all pairs, so even those instruments for which there is no news of their own accelerate all at once.
Why is this dangerous for a trader?
The main feature of such episodes is speed. The move comes in a single impulse, without any prior buildup and without a line in the economic calendar.
- The spread - widens in the moment.
- Slippage - is noticeably higher than usual on execution.
- Orders - some are closed at a price other than the one the trader expected.
The main thing: on such an impulse, a trade is executed at a price other than the one the trader saw on the screen.
What happens next?
The market is watching two things.
- Confirmation. Whether there will be an official statement from the Japanese Ministry of Finance.
- Repetition. Whether the operations will be repeated if the yen goes down again.
The experience of past years points to a series. In 2022 and 2024, Tokyo acted in a series of operations, not a one-off entry.
Caught this jump on USD/JPY?
The regulator enters without warning. In a minute the pair covers as much as it usually does in a week. The whole question is the size of the trade: with a deposit of a couple thousand dollars, such an impulse produces a result on the level of a trip to the store. In prop trading, the account for the trade is provided by the company - after a paid selection process, with an agreed share of the earnings going to the trader. The yen moves in series, so it is worth getting into the mechanics before Tokyo's next entry into the market.