Japan intervenes on the Yen again Asian stocks mostly lower

Two key events sent regional markets lower today – intervention by Japan in containing the Yen’s appreciation and comments from Premier Wen Jiabao on the Chinese government’s role in containing property gains.

On the latter, Chinese stocks fell for the first time in over a week after a commitment to firmly maintain property curbs was announced. Real estate stocks on the Shanghai Composite Index were down just under 1%, nothing disastrous but a drag on recent good news.

Chinese authorities have now made their case very clear – there will be no reckless price appreciation in real estate going forward without government checks and balances. A smooth market is not necessarily the best news for real estate developers who are used to quick profits. Short term pain for long term and hopefully sustainable gains.

Far more important to markets outside of China was Japan’s currency intervention which sent the USD/JPY to an intra-day high of 79.46. Having learnt from the prior ineffective intervention effort, it seems like this round will have a large influence on the currency. Another failure will raise large question marks.

There will be a cost to this intervention, particularly if U.S. jobs continue to lag and another round of quantitative easing is announced by the US Fed in the coming months. Still, Japanese exporters must be feeling the pressure from a strong currency as they try to ramp up post Fukushima. The pressure on Japanese authorities, including Finance Minister Jun Azumi to act, is difficult to dismiss.

U.S. jobs data is due out this week with the ADP Employment report on Wednesday, Jobless Claims on Thursday and Nonfarm payrolls on Friday. The markets will be taking a close look at all these important figures this week.

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