According to folklore, if a groundhog emerges from its burrow then a spring thaw will come early. If, instead, it sees its shadow, it’s scared back into its burrow and winter will continue for another six weeks.
Haruhiko, the carry trade groundhog, poked his head out of his burrow last night, saw the strikingly bright light of futile, failed policy, and quickly withdrew. There will be no more QQE (at this time) to thaw the market’s recent freeze.
Although the yen can and has been heavily manipulated without QQE expansion, it’s been a key component of the carry trade since 2011.
USDJPY traded as low as 119.39 before the intervention arrived, boosting ES by 6-7 points in the hour after dismal retail sales and Empire Mfg numbers raised “bad news is good news” hopes that the Fed won’t also disappoint.
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