USDJPY Tumbles On Sankei Article BOJ Is Struggling To Reach Policy Consensus

Tyler Durden's picture

After having dropped all day following the latest set of poor US data making a September rate hike virtually impossible, moments ago the USDJPY snapped lower by nearly 80 pips, tumbling as much as 101.25, as stops were hit, reaching the pari's lowest level since August 26.

 

Among the reasons cited for the steep drop on trading desks, is that according to an article in Japan's Sankei published just over an hour ago, the BOJ is struggling to form a unified opinion on policy review. The Sankei explains, without saying who provided the information, that policy board members are struggling to reach a consensus position on comprehensive policy review to be released at Sept. 20-21 meeting.

It goes on to say that members are divided between those who support negative interest rates, prioritizing government bond purchase, and others who oppose additional easing measures:

  • Governor Haruhiko Kuroda seen to be a negative interest rate supporter
  • Deputy Governor Kikuo Iwata seen to support expanding monetary base
  • Takahide Kiuchi, Takehiro Sato seen to oppose additional easing

In other words, chaos, with the Sankei concluding that the BOJ likely to debate until final moments on whether to present unified view or list individual positions.

This fits with what Abe advisor Koichi Hamada said in an interview earlier today when according to Bloomberg he suggested that the BOJ should wait until after the Fed decides on interest rates before acting itself, said Koichi Hamada, an economic adviser to Prime Minister Shinzo Abe. Hamada correctly pointed out that the BOJ risks having its efforts overshadowed if it expands monetary stimulus at its policy meeting on Sept. 21 and the Fed then just hours later decides to keep U.S. interest rates unchanged.

“The BOJ should wait for the Fed,” said Hamada, in an interview in Tokyo on Monday. “The present focus of attention is on the U.S. exit policy.”

As Bloomberg adds, a Fed decision to raise borrowing costs would do more to weaken the yen than anything the BOJ would do, according to Hamada, a retired Yale University professor. The BOJ would still have the opportunity to increase stimulus at meetings in November and December.  BOJ Governor Haruhiko Kuroda will want to avoid a repeat of what happened in January, when he introduced a negative interest rate only to see the yen strengthen as part of a global flight to safety.

Previously, in a speech delivered by Kuroda on Monday, BOJ governor Kuroda called for a comprehensive review of the BOJ’s monetary policy for the board to consider at its September meeting. Specifically, he signaled a willingness to bolster already record levels of stimulus and undertake new measures. Hamada said the BOJ should refrain from cutting the negative rate further for now because it has already had some negative effects on the banking industry and hurt household sentiment.

The market's reaction to the speech was negative, sending the Yen higher as Kuroda failed to indicate a firm commitment to any specific policy, something the Sankei story has validated.

Further weakening the dovish case, was another report according to which PM Shinzo Abe told reporters at the close of a Group of 20 meeting in Hangzhou, China, late on Monday that foreign bond purchases are illegal under the Bank of Japan Law if they are meant as a form of currency intervention, which means that the plan floated by Hamada to buy foreign bonds will likely not be implemented in the near-term, if at all.

What is more curious, based on the latest Hamada's comments, is that not only is the BOJ no longer data - or even market - dependent, but is entirely reactionary, and its policy will be driven almost entirely by what the Fed will do prior to the Bank of Japan's own decision has to be made. 

In short, the BOJ has lost control of its own monetary policy, and is forced to respond to any and every announcement and action by the Fed.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
BabaLooey's picture

Nice trade, Senor Yen Cross!

LetThemEatRand's picture

I didn't catch this trade, but Yen Cross has gone on record several times here and he has been right almost every time.   I hope I didn't jinx you, YC.

Yen Cross's picture

      I've gained tremendous insight from  all of the brilliant individuals that I've had the pleasure to meet on Z/H over the years.

  I actually think Z/H is, and will continue to be, instrumental in the next Presidential election.

 This wonderful site has opened many eyes, and I for one, am eternally grateful for it's existence and contributors.

tc06rtw's picture

   
 …  It’s nice to discover  Mr. Yellen  is
more powerful than we thought he was.
   

Janet Shalom Bernanke's picture

I'd hate to see a perfectly good rope damaged to hang that son of a whore Kuroda and Abe, but if the ends justify the mean,we can make more rope.

Japan's economy needs to finish imploding so the crooks at the Fed can get a glimpse of what is coming for the U.S.A. and the end of their crimes against the American citizens.

 

stocks up everything else down's picture

shit or get off the pot Janet. The rest of the world is fed up (no pun intended) with your jawboning.

Lonesome Crow's picture

It is not a monetary policy.

What is it that purchases the bonds?

Existing productive work or future productive work?

Raisuli's picture

Hmmm, what do they know?

“The BOJ should wait for the Fed,” said Hamada, in an interview in Tokyo on Monday. “The present focus of attention is on the U.S. exit policy.”

 

Exit policy?

Yen Cross's picture

  I wanted to BTFD, and also know Abe and Mr. Smiles Kuroda are going to drop a load.

 This whole setup reeks of SNB shenanigans.

 You can see how the BoJ is going to go "full retard" and the Fed. is laying low.

 I also see how the cable and euro, are playing nice.

LetThemEatRand's picture

From the G20.org mission statement:

"At the Antalya (Turkey) Summit in November, President Xi Jinping laid out the theme, priorities and the general idea of China's presidency. President Xi emphasized that the theme of the Hangzhou Summit, "Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy", is designed in light of the development needs of all countries amid the current economic situation to promote stable growth in the short term by addressing the symptom and to drive growth in the long term through tackling the root cause. To be specific, "innovative" refers to innovation-driven development, including innovation in science and technology, as well as innovation in development concepts, systems and institutions, business models and structural reform, which will help find new sources of growth for the world economy. "Invigorated" means to lend impetus to the sluggish world economy by exploring new paths, tapping new forces and stimulating new vitality. "Interconnected" indicates a sense of community with shared interests and common future, calling for closer international economic cooperation, sharing of opportunities through connectivity and creation of synergy through sound interactions. "Inclusive" aims to narrow development gaps among countries, focus more on developing countries and all groups of people, and allow all people to benefit from the growth of the world economy."

My interpretation is that they know they need to boost wages in order to convince the general population that globalization is a good thing.  I've read several pieces that suggest world leaders know that there is general unrest.  If they try to increase wages to offset the looting and money printing for the benefit of oligarchs, that means real inflation in the long term.  What it means in the short-term is probably propping up equity markets to make all appear normal, and direct injections of printed money into the real economy.

The Once-ler's picture

   
 …  As long as the world keeps honoring China’s credit card,  everything’s peachy.

   
When it starts being  declined,  things become interesting.
   

hooligan2009's picture

whilst it is clear that, if the fed was a political party, it would be a royalist party favoring the landed gentry over and above the serfs, it is nor clear what sector of the Japanese populace the BoJ is acting for.

japan is a de facto, one party (communist) state - the demofraphics of japan suggest that the BoJ is favoring anage demogaphic - the migration of the population into retirement and into consumption rather than saving is perhaps something the BoJ is going all King Canute over.

the central banks of England and the ECB are boviously in the cmap of favoring an (near eastern and african moslem) immigration and the eradication of any indigneous populations culture.

the big problem the landed gentry in the US has with hillary (apart from her stupidity, corruption and lung cancer) is that the logic of democrats to favor women as an oppressed majority is incompatible with the wish to promote muslims who treat women as chattels - democrats like the tratement of young boys by oled male moslems - but that doesn't seem right either to most indigneous peoples.

yogibear's picture

BOJ die already! Long and drawn out death of 30 years.

Japan is a preview of what is going to happen to the USA.

Same Fed plan. Tried out in Japan first.

The Bell Rang's picture

100, coming up fast...

 

The Bell Rang's picture

100, coming up fast...

 

Yen Cross's picture

  All the players are really quiet.

  I think Moe Howard needs to talk about macro, and start getting real with people.

  [ I'm NOt holding my breath]

Kaiser Sousa's picture

"Japan is a preview of what is going to happen to the USA."

going to???

u meant "Japan is a preview of what is happeining to the U.S. im certain...

Father ¢hristmas's picture

Europe is America six months to a year into the future, Japan is us a year or two later, and Venezuela is us two to four years after that.

Kaiser Sousa's picture

thanks for the analysis...

now its time for a High Life & a shot of Jameson...

the country is Fucked.

AR15AU's picture

exactly... god forbid you should use gold and have a currency which is completely detached from the bannana republics of the world.

in other news, i can't find hillary coughing on google. its as if the google search engine is not able to find articles on Hillary Coughing unless you literally type out the whole word: HILLARY CLINTON COUGH and then suddenly you get results from that day only... thats on Google by the way

Dark Daze's picture
Dark Daze (not verified) Sep 6, 2016 8:40 PM

The BOJ should tell the FED to fuck off and die.

gregga777's picture

The rich plutocrats will be terribly upset if the Goldman Sachs Feral Reserve raises interest rates. So, it's not going to happen…not 'til Hell freezes over anyway.

Dark Daze's picture
Dark Daze (not verified) gregga777 Sep 6, 2016 8:44 PM

Yeah, isn't it great that they are such 'patriots'.

Dark Daze's picture
Dark Daze (not verified) Sep 6, 2016 8:43 PM

This entire mutli decade charade is like a fully loaded 30 wheeler gasoline truck starting to wobble on the road at high speed. Usually, once the wobble starts, it only gets worse, with predictable consequences. Has everybody got their backs covered? I hope so.

Bunga Bunga's picture

Fuck it up already!

lucky and good's picture

I remain amazed  that many people still consider the Japanese yen a "safe haven" currency. This flies in the face of reason. For years many economist have looked at Japans economic path and predicted an economic crisis brought on by the growing debt of its government. The reality is that much like the situation that developed in Greece it is clear that Japan is facing a wall of debt that it will never be able to repay.

The myth promoted by the central banks that a major currency cannot fail is accepted as fact by many people however, the rapid demise of either the yen or the euro is all that will be needed to reveal the truth and remind people everywhere that our system of fiat money is held together only by faith in the system and a prayer. below is an article making the case the yen is destined to fail.

 http://brucewilds.blogspot.com/2016/06/the-yen-and-its-failure-to-fail.html

moneylover3's picture

Japs must start importing rapefugees & jihadis

ja ja ja