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While the stock market may be disappointed with Fed Twist, the authorities in Japan are probably relived. The Japanese yen had been approaching all time highs against the dollar in recent days.

USD/JPY now rises, as the dollar rises across the board and moves away from the intervention zone.

Each time the pair got too close to 76, comments about “watching excessive foreign exchange moves” were heard by Japanese officials. The safe haven status is a big burden on Japan’s export oriented economy.

One of the “non decisions” made by Bernanke and his colleagues was to refrain from lowering the interest rate on excessive reserves parked by banks at the Federal Reserve. If they would have lowered it to “Japanese levels”, more money would have shifted from the US to Japan.

In addition, the wide “Operation Twist” in a scale of $400 billion, eases the pressure on short terms yields in the US. Both the action and the inaction by the Fed support a stronger USD/JPY.

Dollar/yen is at 76.60, still not far from 76, but with the limited movements of this pair, this is significant. Resistance is at 77. For more on the yen, see the dollar yen forecast.