The U.S. government intervened in foreign exchange markets to help Japan prop up the yen. The yen moved from 163 to 157 against the dollar. Markets reacted by doing absolutely nothing of consequence.
This marks the first time America has stepped in to defend someone else's currency since the Clinton administration, which tells you how f*cked the situation was. Japan spent decades trying to weaken the yen to boost exports. Now they're spending billions to strengthen it because imported ramen costs too much. Consistency is for people without printing presses.
The technical setup here is pristine. Draw a line from 163 to 157. That's six yen. Six is half of twelve. Twelve is the number of months retail traders will spend convincing themselves they predicted this move. They didn't. They were long Bitcoin and convinced the dollar was collapsing because a guy on YouTube told them fiat was dead.
Currency interventions work exactly once. Then the market remembers that fundamentals exist and goes back to doing whatever it was doing before central banks lit money on fire. The yen will drift back toward 160 within weeks. Japan will issue a strongly worded statement. The U.S. Treasury will pretend it cares. None of this will matter by September.
Every forex trader who panic-closed their USD/JPY position at 158 is currently refreshing their account balance and wondering why financial literacy isn't taught in schools. It is taught in schools. They skipped class to watch day trading seminars.
The intervention cost billions. The yen gained four percent. Do the math on that return and try not to laugh. Actually, don't bother. Your calculator doesn't have enough room for that many zeros in the denominator.
Photo by Marek Studzinski on Unsplash
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