Still, the Yen has rallied on "Safe Haven" trades. Whenever traders were feeling risk averse, they would buy the Yen on the crosses along with the Dollar and sell everything else. To put a stop to that the Bank of Japan has twice intervened with rather dramatic results. Unfortunately for them, traders have simply used the intervention to come right back in and bid the Yen back higher basically negating the gargantuan effort required to derail it.
Now comes along the FOMC with its ZERO INTEREST RATE POLICY and it has basically the same impact on the Yen as did the BOJ intervention - it moves LOWER. The reason for this is that the liquidity party is a green light for the risk trades (why else would copper be at a nonsensical $4.00 pound?). In that environment, no one wants to buy the Yen so down it goes.
One has to suspect that the FED and the BOJ are closely communicating these days as the impact of monetary policy is working nicely for both of them as neither one particularly wants to see a strong rally in their respective currency.
BOJ - Printing Yen - check
ReplyDeleteBOE - Printed up 50B fresh Pounds - check
EU - The grand prize winner - ECB expanding balance sheet by a whopping $3T Euros, but no - they are not doing QE. LOL
US - Stealth QE via cheap swap lines
US - Overt QE in March/April
The pressure on gold is building up. Specs won't be able to ignore this action. With the ES bumping up at 1350 resistance, one would think if it doesn't continue on it's upward trajectory soon - - that we'll finally see some meaningful rotation into PM's again.
Financial Repression at it's best. Keep pressure on two opposite sides of currency trade debasing both, but not quite enough to allow a pattern. Have the bullion banks continue to beat down the inflationary metals, stoke fears about the eventual meltdown of the Euro so no traders can go in for any lenght of time. I still say current oil bet the best of all. They cannot control the political upheaval occuring. The Arab Spring has evolved into the "mass murder" Winter. Eventually, someone breaks. Tick, Tick, Tick,......Dan, thank you for your continued blog. Here in Maryland, our profligacy continues. Current Gov has turned a $3 Billion dollar budget surplus into a -$2Billion dollar deficit in short order. No we will not open up the Natural Gas fields in Western Maryland!!! But we are going to increase the gas tax another .20 gallon from .38 cents a gallon. We will tax the internet sales .06cents a dollar, and we continue to spend like fools. Soon I am into the hills of Virginia. Good luck Mr. O' Malley.
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