In yesterday’s post, we noted that the USDJPY had gone as far as it could without a breakout. Indeed, overnight, the BoJ flinched. In an interview recorded on June 17 but, not so surprisingly, not released until today, Kuroda confirmed that there will be no 20 trillion yen increase in QQE and, most definitely, no helicopter money.
Thus, the remarkable runup in USDJPY since the post-Brexit 98.99 lows has been undone, right? Not exactly.Regular readers know that the absence of additional QQE doesn’t mean there won’t be plenty of additional currency manipulation. And, remember, Kuroda is famous for his head fakes — saying one thing and doing the opposite a week later.
Let’s also not forget that it’s easier and cheaper, anyway, to manipulate other, more powerful algo drivers such as oil futures. Witness yesterday’s spike in CL. While the talking heads attributed it to a bullish EIA report, it commenced over an hour before the EIA data was released — as S&P 500 futures were plunging. Just another day at the office for central banks.
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