Last night, while the S&P e-minis were ramping on the basis of nothing whatsoever, Bank of Japan head Haruhiko Kuroda spoke to the Japanese Parliament:
“The yen is unlikely to weaken further in real effective terms if you think with common sense, given how far it has come,” Kuroda said in parliament Wednesday.
While the FX world argues his intentions (and the uncharacteristic injection of “common sense” into the equation!) USDJPY is tanking — this, after reaching our upside target last Friday.While he has no intention of paring back QQE at this time, and still insists there are no asset bubbles in Japan, the yen carry trade has been the single biggest driver of stock prices since late 2011 [read more HERE.]
Look for a sharp rally in oil and the euro in order to mitigate the effects. But, if the yen carry trade unwinds, the “markets” are pretty much screwed.
This changes our upside target for this bounce.
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