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BoJ Decision Disappoints, Yen Surges On No FX Intervention Announcement
The BoJ just released a decision to extend the 3 month lending program to 6 months, to expand the 6 month fixed rate facility to 30 trillion yen from 20 trillion, extended the maturity of QE, and kept the benchmark rate at 0.1%: in essence a nothingburger extension of QE, which has done miracles for the past 20 years. The key item, however, is that there was no direct mention of FX intervention by the BoJ, which was the silver bullet many had hoped for. As a result, the Yen is currently surging.
USDJPY below. Futures soon to follow:
More from Bloomberg:
The Bank of Japan expanded a bank- loan program, stepping up its monetary stimulus for the first time since March after the economy’s recovery weakened and the government pressured the central bank to act.
The BOJ will boost the amount of funds in the facility by 10 trillion yen ($116 billion) to a total of 30 trillion, the bank said in a statement after an emergency meeting in Tokyo. Governor Masaaki Shirakawa led the gathering after cutting short a U.S. trip in the wake of increasing calls from politicians for the BOJ to help stem a surge in the yen to a 15-year high.
Today’s decision reflects rising concern about growth in advanced economies that sent global stocks tumbling in the past three weeks. Federal Reserve Chairman Ben S. Bernanke three days ago signaled a willingness to implement further steps if needed to avert another U.S. recession, in a speech that triggered a gain in stocks and the dollar.
“The BOJ’s additional loosening alone may not be sufficient to reverse the market’s trend, but it could make it easier for the Japanese market to ride the waves of a global market recovery,” Takuji Aida, senior Japan economist at UBS AG in Tokyo, said before the announcement.
The bank-loan program that the BOJ is expanding was set up in early December in response to a November climb in the yen to the highest level since 1995. That mark was breached this month, when the currency hit 83.60 per dollar.
The yen recouped some of its losses after the announcement, trading at 85.55 as of 12:19 p.m. in Tokyo today. Any moves in the currency market today may be exaggerated by a U.K. holiday, closing the world’s biggest market for foreign-exchange trading.
Reacting to Yen
The extra 10 trillion yen unveiled today will be offered in six-month credit. The term for the other 20 trillion yen remains at three months. BOJ policy makers doubled the size of the bank- loan fund to 20 trillion yen in March. That decision also followed political pressure, with then Finance Minister Naoto Kan urging the central bank to adopt an inflation target to help end declines in consumer prices.
Kan, who is now prime minister and battling to keep the post following a challenge to the leadership of the ruling party, last week said “we are ready when necessary to take bold measures” in the currency market. Speaking to reporters Aug. 27 after meeting with business executives, he said he expected the Bank of Japan to take action “swiftly.”
In addition to the central bank’s move, Kan’s aides are compiling a stimulus package to buttress growth as consumer prices keep falling and prospects for export growth are hampered by slowing expansions in overseas economies. Kan will meet with Shirakawa today and then decide on the outline of his government’s economic stimulus plan, Chief Cabinet Secretary Yoshito Sengoku said at a regular press conference in Tokyo.
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Just kidding bitchez.
hahahahha! ;)
Asians are sneaky Bitchezzz
themosmitsos
spekulatn
(deleted)
QE FAIL
Also look at the ES vs AUD/JPY as it is now reconverging
Actually, that's interesting and a bit surprising.
S&P futures moved 2 handles down on the shock.
TD, man, you really do some great work. I just wish it wasn't somewhat in vain due to the outrageous fraud. The site is awesome (OK, less Leo...but still) and the best on the web, period.
OK, I'm hitting the keg-o-rator one more time and hitting the bed but...I still say the futures will be pumped to a full 10 handles by the time I wake up with a hangover.
Dude, you know it - zerohedge is a frickin lighthouse in the bay of financial bullshit. Rock on man.
Let's all sing together: Youuuuuuu don't know what you're doooooiiiiiiing
Not that this changes anything; how about we all stay the hell away from anything the BoJ ever touches. Ever. Except JPY longs--maybe, after my fourth old fashioned. Maybe.
Old fashioned's...man, I paid my way through Purdue bartending and hated making those fuckers...unless you get it without the fruit wheel, in which case...well played.
The only thing worse than those were Gibsons...those onions are fucking nasty man...
So in the war of fiat who wins?
Because this is a war.
Anyone who thinks we are not at war is an idiot.
Actually, I think it's a version of MAD and there are only losers.
Besides, I think we can take the Japs. They are generally smaller and lighter. Granted, they are more radical but we have more people and nukes. Furthermore...I think I'm off topic.
I take it you didn't watch the little league world series today. The "Japs" are some serious bad ass mother fuckers. They are not to be fucked with. They fuck shit up and make us Americans look like little bitch cry babies.
Well, except in 2007.
http://www.youtube.com/watch?v=--3_vvUMcxQ
But it is 2010....
Central Banks...engineering your destruction since their inception.
WSJ is reporting that the BOJ loosened montary policy by 'pulling a Ben' and lengthening the timeline for low interest loans for money markets....
World yens for the yen
Japan yo-yos yen
Ben hollers for the dollar
You forgot the kigo.
Git stimulatn mofos.
http://www.bloomberg.com/news/2010-08-29/deficit-costs-declining-give-ob...
..and where does this additional (stimulus) money come from, the banks ? Where do they get it.. is it given to them by the Fed ? Where does the Fed get that money.. it invents it out of thin air increasing its balance sheet ? Just tryin to get a handle on this whole borrow and spend thing.
"and where does this additional (stimulus) money come from"
It's an elf, riding a unicorn, sprinkling pixie dust, along the road to nirvana, which always lies just over the next horizon.
I wondered why the Nikkei jumped over 3%. Yen futures had not declined too much. Thanks to ZH, I now know the answer. I am tempted to sell Yen, but that is not a trade I had planned to make.
Obviously, the japanese citizen is not as moronic as the american citizen. They don't like their money devalued to nothing. They actually have a proper education system over there. We on the other hand welcome money printing because of our collective stupidity. They call it quantitative easing so the normal dumb person doesn't realize they are printing money.
The Japanese have been looking for higher yields for years - I was there a few years ago and a local pointed out the interest on a regular savings account and it was something like 0.05 percent. Nope I am not making this up.
As a result the kimono-class have been shopping around for higher yields WW. This works fine as long as the yen is weakening. But when there are signs of strenthening - then back up the truck, dump the foreign stuff and bring it home, baby! They don't want their silk singed, especially as they aren't getting much better deals overseas these days!!
japan doubling up before the flop?
well round one of rumor mongering over and ES was ramped up 1%, now the pavlovian HFT computer operators in HK and Singapore (there aren't any hedge fund managers left in Tokyo, their Wall Street bosses cannot afford the living allowance adjustment due to the expensive yen) are taking profit and enjoying their lunch with a quickie thrown in. Soon will be reloading for the next round of rumor mongering; it's the end of the month, instruction from wall street : got to get the red monthly candle to show green, only 2 days left.
Looks like they did a little case study on Swiss intervention...
so if the yen is going up how come the Nikkei is also surging?
BoJ holds emergency meeting:
http://www.presstv.com/detail/140558.html
BOJ wants to learn it the hard way. No problem at all. What about a hammer to 70 USD/JPY ? Maybe this will spur the "learn effect" and the old boyz gentlemen´s club will finally act ?
Can't have the crutch get shortened now, can we?
You know what - I'd love to have a "Zerohedge PUT". Just pool capital, get some index PUT options bought, and GO WITH IT. Your contribution dictates the percentage you receieve, relative to the cost basis. Surround it with a big fat post and some publicity about how this is a reflection of 'x' number of investors who have had it up to HERE with the glad-handling FED policies and other tomfoolery.
Big 'ol website, showing where and when everyone decided to flip a big "F***K YOU" to the equity market.
I can dream, can't I...
China's Anti-Ship Ballistic Missile - a Long-Feared Weapon Known As the "Carrier Killer" - is Close to Operational
Do people in China have access to ZH?
STEVE FORBES BELIEVES IN GOLDSTANDARD!!!
http://www.thedailybell.com/1328/Steve-Forbes-on-Overseas-Wars-the-Comin...
Daily Bell: You have studied economics for most of your life, it appears. Do you consider yourself of the Austrian school? Are you surprised by the progress the Austrian School has made in the 21st century?
Steve Forbes: The basic tenets of the Austrian School have withstood the test of time, and while I may have some variation of views on how you'd implement say, the gold standard, I think the basic tenets are absolutely there. Hayek, Mises and – though he's not considered a fully part of it – Schumpeter had insights on entrepreneurship. Liberty is good, government domination is NOT!
Daily Bell: You mentioned a gold standard. Should the Western world return to some sort of gold standard? What would it be? Is it feasible?
Steve Forbes: We will return to a gold-based monetary system. I don't think we'll go back to a 1920s or 20th century-style gold standard. But I think monetary policy will be tied to the price of gold, which manifestly it is not today. So, yes, a gold-based system is coming back, and it will be good!
Euro should have been in the 8 handle last night when the markets opened. That was the tip-off that something was wrong. Now it's down to 7 even, trying to hold. I'll buy a few here.
Well it looks like the race to the currency bottom continues. Whats another $10 trillion Yen? I've got a great idea. Why doesn't Japan tweak their toliet paper a little bit? They should make Yen toilet paper, literally. Rolls of Yen toliet paper would be a fantastic move. You can wipe your ass with it and stimulate the Jap economy all in one shot.
On another note, why is it these central banks idea of easing is to gun their markets as helicopter Benny Boy is doing now? How does buying your own debt and letting the primary dealers gun the S&P helpful to an ecomomy? How does that create jobs? Does it not turn our markets into more of a casino based off hot money flows further destroying what ever natural price discovery is left?
Yes.
"How does buying your own debt and letting the primary dealers gun the S&P helpful to an ecomomy? How does that create jobs?"
Short term thinking I guess, but I do think artificially keeping markets afloat does help a little bit in spending. You know, people get their monthly statement and see it's up. So, they might feel a little better and spend. Or, they have been cashing out their equities at elevated prices. Some, might spend more. If anything they are buying time at a high cost. Spending is what america is about, or should I say was about.
I do not agree with this action.
There is a darkside to this and its coming soon. Nothing is free.
Anyone have a cigarette to go with this blindfold.
Its about confidence, once that is gone there is no system.