I am watching the reaction to the BOJ’s announced monetary policy moves and quite frankly, am more confused than ever, especially when coupled with today’s preliminary US Q2 GDP number. The reading was an abysmal 1.21%.
So let’s get this straight – the markets were disappointed with the BOJ and thus sent the Yen soaring higher. That was a vote of no confidence in the Bank because everyone and their dog knows that both the BOJ and especially the Abe administration desperately needs a weaker yen to stave off the deflationary spiral they are contending with. Perhaps traders are coming around to believing that the Bank of Japan has indeed reached the limits of its tools.
The surge in the Yen put pressure on the Dollar which was then further hit on account of the pathetic US growth number.
This post was published at Trader Dan on July 29, 2016,.