Japan Turns to Pensions, Not Printing

The Japanese government is instigating changes at its massive public pension in a move that could take pressure of the BOJ. In light trading Monday, the Canadian dollar was the top performer while the kiwi lagged. The Japanese and Australian leading indexes are the lone items on the upcoming calendar.

Japan may look to spur growth by re-allocating its $1.2 trillion pension fund rather than BOJ stimulus – at least for now. On Friday, the government said it planned changes and today it delivered by appointing 7 new members to the 11-person pension investment team.

Several of the appointees have argued for steering investments into more dangerous assets from the traditionally domestic-bond-heavy portfolio. Changes won't be dramatic but they may push out the timeline for BOJ easing, especially as policymakers take their time evaluating the consumption tax.

Elsewhere,  the New Zealand dollar has been under pressure for the past 10 days. A large part of the reason is falling milk prices  and that's a trend that threatens to continue. In the near-term, however, the focus will shift to the RBNZ decision on Wednesday. All 15 economists surveyed by Bloomberg expect Wheeler to hike so hawkish/dovish comments will be key. Look for moves on pre-decision positioning in the 24 hours ahead.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

• EUR +28 vs +23K prior
• JPY -67K vs -87K prior
• GBP +51K vs +46K prior
• AUD +8K vs +3K prior
• CAD -35K vs -34K prior
• CHF +14K vs +11K prior
• NZD +20K vs +20K prior

The notable move is in the yen where long-term bears are beginning to clear out. The crux of their case was that the BOJ would ease shortly after the consumption tax hike but that's growing less likely. Ex-gov Suto was on the wires Monday say the BOJ is likely to wait until hitting its targets is impossible before taking action.