USD, JPY flows: USD/JPY dips in early US

Nothing particularly surprising from the US data, although the low level of claims continues to support a positive take on the US labour market. However, USD/JPY has fallen further in early US trading, no doubt reflecting a reaction of the US market to the BoJ intervention in NZ time last night. The fact that the BoJ is clearly intending to hurt short positions and prepared to use whatever tactics give them the biggest bang for their buck may well be convincing people that the JPY short party is over. If so, there could still be a lot of downside for USD/JPY, as even the nominal correlation with yield spreads suggests we could see mid 140s, while any reference to real exchange rates suggests we could see something a lot lower.