hmm, trading in Rand causing things in JPY? I dunno...
The game behind BOJ intervention, USD vs JPY
- Thread starter tsfx
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hmm, trading in Rand causing things in JPY? I dunno...
That move 150 increased options prices like mad. Bets on volatility have increased making actual possible volatility less likely now
Slowly but surely there's growing attractiveness in long SP500 / long yen structure. SP just might close that 4050-4000 gap first.
lol that lil move earlier was all bark no bite...are they running out of money to strongarm the markets or what
i think BofA got a point when they revised the ceiling upwards to 155, the markets seem to be calling out their bluff at 150
Intervention by BOJ (if it indeed happens) just causes temporary spikes that are bought into immediately (or bids/asks reprice immediately back up).
Here's an USDJPY chart how intervention "worked" the last time for BOJ. 3 interventions, every time price traded back. Then, BOJ changes policy and starts massive money printing which had a lasting devaluing effect on currency. In total, it took almost 2 years. The intervention goals are a lot different than is widely thought. Why didn't BOJ engage in monetary policy shift right away? Why bother with interventions that never work? Those are the real questions
I think it's quite the opposite. Everything is about yield atm and thus about the JPY because JPY is a proxy for yield. US10y trading above 5% is a milestone and JPY trading near decade highs against several pairs which is something not seen in a long time. This attracts a lot of attention since this IS a long term oppportunity.
It's also important because it's the shift in JPY and yields and USD that will prevent a deep one sided crisis in the stock market (again).
EUR and USD are the top dogs anyway, all the time. There's also a "once in a life time" opportunity in the EUR as well
Yeah, interesting how this article is written b/c actually vola spiked pretty strongly with that "break" above 150. Look at the last bounce above 9% from low 8s. Actual market is not at all this volatile so you know there are tons of option buyers and volatility prayers out there. Which is why it's difficult to get a straight up vola boost or direction in UJ.
(Bloomberg)
BoJ tweak
The Bank of Japan has further loosened its grip on government bond yields while also sticking to its position as the final global central bank with negative rates. It said it would take a more flexible approach on controlling bond yields, though the relatively minor tweaks to its policy disappointed some investors and sent the yen lower. “We decided that it’s appropriate to increase flexibility so that long-term yields can be smoothly shaped, according to different future scenarios,” said Governor Kazuo Ueda.
BoJ tweak
The Bank of Japan has further loosened its grip on government bond yields while also sticking to its position as the final global central bank with negative rates. It said it would take a more flexible approach on controlling bond yields, though the relatively minor tweaks to its policy disappointed some investors and sent the yen lower. “We decided that it’s appropriate to increase flexibility so that long-term yields can be smoothly shaped, according to different future scenarios,” said Governor Kazuo Ueda.
yeah, market just taking out all the weak hands hoping for free money from the BOJ. Once the stops are out, THEN we can talk about intervention.