Will They or Won’t They?

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Screen Shot 2015-10-01 at 7.43.53 AMThe leaks were flying fast and furious last night as everyone wants to know whether or not Japan will expand its QQE.  Bloomberg’s “unnamed source” insists it won’t – at least not any time soon:

Bank of Japan officials see little need for an immediate expansion of monetary stimulus and would prefer to hold off to get a clearer picture of the economic outlook, according to people familiar with their deliberations. 

Board members who gather for Oct. 6-7 policy meeting want opportunity to observe further economic data and developments in financial markets at home and abroad, according to the people, who asked not to be named because talks are private.

Screen Shot 2015-10-01 at 7.42.49 AMThis was enough to get USDJPY all the way down to the bottom of a rising channel where, naturally, it was propped by another source — ex-BoJ Gov Iwata who told Bloomberg:

“Listening to Kuroda makes you think there is no need for further easing but the real economy is worse than expected,” Kazumasa Iwata, a deputy governor from 2003-2008, said in an interview Wednesday. “It’s moving in a direction where the BOJ has to do something.”

Buying more government bonds with longer maturities as well as exchange-traded funds and investing in real estate trusts are options the BOJ has for further stimulus, Iwata said. Given limits on available bonds and the need to keep buying them, the BOJ also may have to cut the 0.1 percent interest rate on excess reserves, he said.

2015-10-01 USDJPY 60 0619Understandably confused, futures are clinging to a modest gain after being up over 20 points last night.  Will it hold?

To answer that, we have lots of charts to look at this morning.  We’ll start with the big picture, which is always interesting in the midst of a market that’s swinging wildly in either direction.

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