Japanese financial authorities have been very active in fighting current crisis. Together with FED they remain the most engaged of all of world’s governments. Today new initiative was unveiled. This new scheme is aimed to support the stock market by buying exchange-traded funds directly in the market. Under the proposal, a new public body would be set up by the government to buy the shares with funds raised from the Bank of Japan as well as private banks and guaranteed by the government. So far about $15Billion have been allotted for this purpose. Direct purchases could boost the ability of banks to lend money, since they count stock investments in their portfolio as capital. The higher the value of those holdings, the higher lending capacity. This measure is promised to be temporary and last till about 2012. Also, purchases would be made only if very specific set of circumstances occurs.
Question is, should government even engage in stock market interventions? If it can happen in Japan, it can also take place here. And yes, our financial authorities will not hesitate to come up with something like this, if they deem actions to date not adequate. So far they have been adding one initiative after another. One agency, Treasury, is selling paper to raise funds, while another, FED, is buying it back in order to suppress the rates. If this doesn’t produce desired results, who knows what they’ll come up with next? We already had selective bailouts, buying stocks wouldn’t surprise me one bit at this stage. We’ll see how it works in Japan. If anybody deserves a good run of stock market it is them- NIKKEI has been on the skids for 20 years now, so I wish them well. But how far should the governments go in current situation?
Yen gained strength again, some could say because of these positive news from Tokyo. I don’t know why, but it did. Trade from last post, a buy in CAD-JPY has not been triggered. Order is valid and remains active. JPY trading was very slow for me. How slow? Well, as slow as it gets.

This is a 5M chart of the beast, my standby venue for some trading activity. It witnessed none at all today. Not one upside breakout meeting my criteria. Pretty rare. Normally on days when GBP-JPY is falling I manage at least a loosing trade. No such luck on Friday. The blue lines show levels where price movement was very promising for long entry. Some other time, perhaps.
Early week was good for me, with last couple days slow. Normally it is the other way around. Slow start, busy finish. Back to normal after the weekend?

Mike K.