Week of Volatile Unpredictable Moves of Yen

This week of volatility and uncertainty for the yen ended and its time to gauge the performance of the currency. And it’s truly a hard endeavor as the Japanese currency posted a weekly gain against some majors, a weekly loss versus others and even ended flat against the pound after the mind-boggling swings.
The yen posted huge gains in the first half of the week as the series of disasters spurred the wave of demand for safety. The earthquake followed by the tsunami and the resulting threat of a radiation leak from the damaged nuclear plant caused the yen to virtually explode to the upside. Such huge surge is not only makes trading hard for Forex market participants, but also can be dangerous for Japan’s economy.
To prevent the negative influence of the currency’s appreciation the nations of the Group of Seven agreed to perform the joint intervention to weaken the yen. This is the first such combined effort since 2000, when the nations supported the euro. The news about the intervention caused the Japanese currency to drop as fast as it’d risen.
The situation in Japan has thrown markets into disarray as the sentiment could change every day and makes it hard to predict the future moves of the yen. On the one hand, the Japanese policy makers already performed an intervention last year and the effect of this intervention was very short-lived. On the other hand, such combined effort can exert a huge influence on markets. Yet still on the other hand markets have tendency to have their own way despite any efforts to make them do otherwise.
USD/JPY opened at 81.44, dropped to the weekly low of 76.47 and ended the week at 80.58. EUR/JPY closed at 114.27 after opening at 113.52 and falling as low as 106.61. GBP/JPY ended the week at 130.78, close to the opening rate of 130.86, after it reached its weekly low of 122.54.

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