Citibank went short USD/JPY yesterday in what they described as a portfolio trade rather than a pure technical trade. My information is that they have been managing a very large USD/JPY selling flow over the last 24 hours and they probably sold some for themselves as well. I’m not sure if this selling officially ended at 5pm NY time or whether there are a few hours to go. They obviously expected USD/JPY to fall a lot more than it did and the reason that it didn’t, I think, is that they ran into China buying GBP/JPY in the low 153s. I have no idea what this is related to. It could be some FX reserve shifting or much more likely it is another of their option or market plays. What happens to USD/JPY, EUR/JPY and GBP/JPY immediately before and after today’ fix will tell us a lot.
