JPY

Hi again Ashraf

I got abit nervous yesterday, after buying NOK/JPY 13.73. But positive NIKKEI, Asia markets and oil helping the NOK to strenghten now. Where do you see this pair in the near future?

Best Regards

BoJ policy preview

Current policy rate: 0.1%
Consensus expectation: steady at 0.1% (Bloomberg, 14 economists)
Taylor rule policy: -3.3%
Headline consumer price index: -1.1% (March)
Inflation objective: 0 to 2%

Notable special measures in operation
Y20,000bn in 0.1 per cent loans for a three-month term
US dollar auctions, amount unlimited, 84-day term

Points to watch
The BOJ has been working on a new special lending programme since its 30th April meeting. There is a better than even chance that it will announce at least an outline on the 21st.
Will the BOJ note the weakness of the euro as a threat to Japans growth?


Whether the BOJ likes it or not, its meetings for the next couple of months will be dominated by the government, both in the form of upper house elections due in July and a long-term fiscal strategy expected in June. The upper house elections give the BOJ a spur to look busy on deflation; the credibility of the fiscal strategy will move markets and affect the BOJs room for manoeuvre.

The outline of the new lending programme is fairly clear. Banks will be able to use some portion of their new loans to growth industries as collateral for 0.1 per cent term loans from the BOJ. Important questions are: (a) the haircut on refinancing; (b) the term of the loans; (c) the definition of eligible loans; and (d) the definition of new lending.

Points (a) and (c) are likely to be drawn tightly in order to protect the BOJ from credit risk. That means that, in order to create any incentive for banks to make new loans, (b) will have to be generous with a term of at least six months, because banks will then know that by making eligible loans they can get cheaper long-term finance. If the BOJ cant come up with a sensible solution for (d), however, then banks will just refinance loans that they would have made anyway.

I suspect that is the most likely outcome of the whole scheme: it will provide a way for the BOJ to extend its operations to the six-month maturity under the politician-friendly guise of boosting loans to small companies.
Will the BOJ continue to be more positive in its language on the economy, suggesting that it does not see recent market instability as a lasting setback?

Maybe things are happening faster than Ashraf expected?
I wanted to short JPY against the NOK.
But now I am scared markets is in a downtrend, JPY go up and we are starting to get deflation.
I am very insecure about the oil-price now.... and it is not so nice, cause I work in the oil-industry.
All looking very insecure.
We had 8 months of very busy times, all had to work over-time. But now, we have almost nothing to do for next month.....
Things do not look to good...
Oil to retest 60 dollar or lower?

Hi Ashraf, Any comment of AUDJPY?