Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
CEREBUS IPO NVIDIA KILLER? - 18th Dec 24
Nvidia Stock 5X to 30X - 18th Dec 24
LRCX Stock Split - 18th Dec 24
Stock Market Expected Trend Forecast - 18th Dec 24
Silver’s Evolving Market: Bright Prospects and Lingering Challenges - 18th Dec 24
Extreme Levels of Work-for-Gold Ratio - 18th Dec 24
Tesla $460, Bitcoin $107k, S&P 6080 - The Pump Continues! - 16th Dec 24
Stock Market Risk to the Upside! S&P 7000 Forecast 2025 - 15th Dec 24
Stock Market 2025 Mid Decade Year - 15th Dec 24
Sheffield Christmas Market 2024 Is a Building Site - 15th Dec 24
Got Copper or Gold Miners? Watch Out - 15th Dec 24
Republican vs Democrat Presidents and the Stock Market - 13th Dec 24
Stock Market Up 8 Out of First 9 months - 13th Dec 24
What Does a Strong Sept Mean for the Stock Market? - 13th Dec 24
Is Trump the Most Pro-Stock Market President Ever? - 13th Dec 24
Interest Rates, Unemployment and the SPX - 13th Dec 24
Fed Balance Sheet Continues To Decline - 13th Dec 24
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Japanese Yen – Is Kuroda trying to talk it up?

Currencies / Japanese Yen Jun 11, 2015 - 10:19 AM GMT

By: Dan_Norcini

Currencies

Last night in the Asian trading session, Bank of Japan Governor Kuroda made some remarks, which I found rather unusual.

Here is the actual quote:
“Once an increase in the U.S. interest rate is priced into the market, the actual action won’t necessarily lead to a further rise of the Dollar again the Yen”.


He then went on to further say:

“Provided there isn’t a surprise other than the market factoring in a higher U. S. interest rate, a further gain in the Dollar seems difficult”.

He made these comments after the Friday payrolls number here in the US had sent the Yen down to a 13 year low against the Dollar last Friday. It sure seems as if suddenly, Mr. Kuroda is singing from a different hymn book.

Remember, this is the same fellow that had been singing the praises of a weak Yen calling it beneficial for the overall economy. After all, if the goal is to generate inflation inside Japan, and to beat back the deflation boogeyman which has haunted that nation for more years now than I can remember, a weaker yen is a necessary part of the plan.

So what gives? I am wondering if Kuroda is getting worried that the Yen has fallen so low that it is going to raise the cost for imported goods coming into Japan and actually hurt consumer spending. In other words, maybe the plan to push the yen lower is now having a counterproductive impact on the consumer in Japan and instead of spurring an inflationary bias might actually be working to crimp economic growth especially seeing that so much of the food and energy needs of the Japanese must be met from abroad.

In looking at the chart of the Yen, today’s surge higher is no doubt the evidence of a huge number of shorts being flushed out by the surprising Kuroda remarks. No one, and I mean “no one” was expecting him to say something like this.

Whatever happened to cause him to change his tune, currency traders are having some second thoughts about leaning on this currency too hard as a result. Now the guessing game will shift to “Does the BOJ actually want the Yen to move higher or where they merely trying to put a floor underneath it?”

The reason so many shorts ran is because they do not know the answer to this question at the moment. anyone who has traded currencies for any length of time knows full well that whatever the BOJ wants for the Yen, it is GOING TO GET IT. I learned that lesson the hard way many years ago. If they say the Yen is too cheap – they damn well mean it and they will not hesitate to make certain that it moves accordingly.

We are going to have to watch this very closely as a result of these remarks. There are an awful lot of hedge funds on the short side of the Yen trade. If they start coming out in size, this thing could easily rally back up to the .8440 region.

We need to see if it can make it up to .8200 first. Given the interest rate differential situation in the US versus Japan, it is difficult for me personally to envision a scenario in which the Yen suddenly reverses its trend lower against the Dollar. However, this appears to be a long overdue correction and that is what it appears that the BOJ desires for now. Apparently they do not want a rapid fall in the Yen from these levels.

Dan Norcini

http://traderdan.com

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader's insight and commentary on the day's price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal's commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair's JS Mineset and King News World as well as may other Precious Metals oriented websites.

Copyright © 2015 Dan Norcini - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.

Dan Norcini Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in