Having given verbal warnings of intervention throughout last week, the Bank of Japan and the Minister of Finance decided to pull the trigger to open this week with JPY selling, as the USD/JPY pair had slid do yet another record low to start the week.
According to Dow Jones News the overall amount for this intervention could rival the ¥4 trillion spent by Japanese authorities back in August. The USD/JPY pair hit an intraday high of just below 79.50 level in the early parts of the intervention, with immediate resistance lying around the 80 level due to selling demand from Japanese exporters.

During the last intervention in August, the gains by the yen were short-lived but today’s moves will at least give those exporters a chance to convert their foreign dollar holdings into yen as the month end settlement nears. The fundamentals around the yen continue to remain the same and therefore we should expect this unilateral intervention action to be short-lived like it has been in the recent past, with the possibility of reversing during this week.

The Ministry of Finance may want to target a level of 80 with its intervention but it would have to maintain very large rounds of continued USD buying throughout the day in order to keep the pair from pulling back down. With concern still revolving around the resolution of the European debt problems there still likely to be safe haven demand for the yen and therefore still likely that it pulls back in New York trading following this intervention.