Back on February 11th, which feels like about twenty-six years ago, I wrote up this post and made the following prediction for the Yen:
Contrary to what many malicious morons maintain, The FED is not made up of irrational, unintelligent, completely clueless policy makers who have utterly no idea what they are effecting. Let’s get real, they certainly realize exactly where their pernicious preconceived monetary programs are ultimately taking us.
After all, understanding the ramification of their mad money machinations is not rocket science. Flagrant faltering financial and economic signs are everywhere to see for anyone who is actually looking. Of course, issuing never ending streams of debt to solve an already out of control debt problem is visibly not a viable solution. They entirely recognize this, a nursery school child could for Pete’s sake. (more…)
Well, I have been nervously waiting all evening for
dildo-san Kuroda to announce what his latest shenanigans are from the Bank of Japan, and now we finally know. They’ve announced a two-pronged plan consisting of:
The USD/JPY is reacting accordingly………
The USD/CAD Forex pair is well overdue for a bounce at the median of a long-term regression channel and the 40% Fibonacci retracement level, as shown on the Monthly chart below.
The Canadian dollar is price-sensitive to the price of WTIC Oil, so I’d keep a close eye on its action following the inaction of the participating countries to lower oil supply at this weekend’s Doha meeting…Oil is -2.21 at 39.50 as I write this post on Sunday evening.
Since Monday, hmmm were there any secret meetings that day…. The Yen has been falling. I laid out a fib retrace and am expecting the Yen to hold support at the 50% line. This is the new fuel for the rocket ship we call our stock market. This is also causing the precious metals some grief (why I bought DUST), and oil to some extent, as well. My belief is the Yen will renew its climb when our Fed does nothing in April, and no way in June with Brexit vote, on tap. In the meantime keep your NUGT’s warm.
Since the Yen low (USD high) at 125.86 in June 2015, the Yen has climbed about 15%. Since Jan 29, 2016, when BOJ (Bank of Japan) moved to Negative Interest Rate Policy (NIRP), the Yen has climbed nearly 12%!
Let’s fully understand that instead of weakening in reaction to negative interest rates, the Yen has strengthened! My reaction to this counter-intuitive situation is that:
1) market psychology has reversed from confidence in QE (very easy money) to concern that it has not, all will not work to produce inflation and demand, and
2) investors have been, and still are, unwinding massive, intermediate-term, short Yen positions that reflected their prior optimism in “Abenomics”.
Who cares? We should, because this counter-intuitive picture is coming to a theater near you, as The Great QE Unwind extends into the US financial markets, possibly much sooner than later.