The appointment process of a new BOJ governor and two new deputy governors has temporarily halted the declines in the Japanese Yen, as traders await the outcome of the process. It now looks like the frontrunner, Haruhiko Kuroda, will get the nod. The appointment likely will been seen in a negative light for the Yen, suggesting the exchange rate of the currency could continue to plummet. At this point, it appears that a financial panic of some sort could be needed to rally the Yen, as the Japanese currency is often seen as a safe haven instrument.
Fundamentals
The Bank of Japan has been much more successful in manipulating the value of the Yen than in previous attempts. The free-fall in the currency began last September, accelerated at the tail end of last year, and has not looked back. This has been welcome news for Japanese policymakers, who are desperately trying to stave off deflation. The lower house of parliament endorsed Haruhiko Kuroda as the next governor of the BOJ, which can likely be seen as a negative force for the Yen. Kuroda is a strong advocate of increasing monetary stimulus. The Yen did stabilize over the past few sessions ahead of the approval process for the new BOJ leadership. The Yen does have the potential to get a bit of a boost in coming weeks, as Japanese exporters tend to repatriate foreign currencies before the fiscal year ending this month. Typically, this is a short-lived event, which can be seen as only modestly bullish.
Technical Notes
Turning to the chart, we see the June Japanese Yen contract falling to its lowest level since June 25, 2009. Prices broke through support at the 1.0515 level without flinching, making the next significant technical and psychological support level at 1.0000. Failure to hold 1.000 could result in the Yen testing the 0.9000 mark, which last occurred in August 2008. The RSI is once again showing oversold levels, which could offer some support in the near-term.
