USDJPY: Long TERM LONG
FED's TAPPERING decision will mechanicaly decrise the supply chain of USD. Therefore USD will mechanicaly increase vs EUR, JPY, CHF GBP to say the least.
On the other hand, BoJ has also decided to put an end to its QE program .
Therefore, one could think that there will be a little battle between the balance of power of USD vs JPY Pair.
However, FEd has the tools to increase the demand of USD, such as FEd's interest rate policy, inflation risk etc, whereas BoJ leverage to increase the demand at a time where supply is limited is obviously limited.
On the monetary supply, there is too many Yen on the market, and no absorbtion capacity, where as the demand on USD is always dynamic and could be increased.
Therefore on a long term, I do think that USD will gain some value against the JPY without prejudice to any decision that can be taken by BoJ or FED.
on a short term, we may face a little correction in favor of USD, particularly because indicators stipulate that we are on the eve of an overbought level. However, this doesn't challenge at all the long term perspective that remain clear for me, even if Abenomics became a success with a 2% inflation in Japan, bare in mind that Japan was the first country to put into force QE since 1999. You will find here under the timeline since 1999.
Oct 2011 Boosts asset buying and lending scheme to 55 trillion yen
Aug 2011 Boosts asset buying and lending scheme to 50 trillion yen
Mar 2011 Boosts asset buying and lending scheme to 40 trillion yen
Oct 2010 Sets up 35-trillion yen asset buying and lending programme
Cuts overnight call rate to 0-0.10 pct
Pledges to keep zero rates until prices stabilise
Aug 2010 Further boosts fund for fixed-rate market operations
Mar 2010 Expands fund for fixed-rate market operations
Dec 2009 Creates fund for fixed-rate market operations
Dec 2008 Cuts overnight call rate to 0.10 pct
Oct 2008 Reduces overnight call rate to 0.30 pct
Feb 2007 Lifts overnight call rate to 0.50 pct
July 2006 Ends zero rate policy
Sets overnight call rate at 0.25 pct
Mar 2006 Reverts to policy targeting interest rates
Overnight call rate effectively set at zero
Mar 2001 Adopts "quantitative easing" policy
Feb 2001 Cuts overnight call rate to 0.15 pct
Aug 2000 Ends zero rate policy
Sets overnight call rate at 0.25 pct
Feb 1999 Adopts zero rate policy
Pledges to guide call rate "as low as possible"
On the other hand, BoJ has also decided to put an end to its QE program .
Therefore, one could think that there will be a little battle between the balance of power of USD vs JPY Pair.
However, FEd has the tools to increase the demand of USD, such as FEd's interest rate policy, inflation risk etc, whereas BoJ leverage to increase the demand at a time where supply is limited is obviously limited.
On the monetary supply, there is too many Yen on the market, and no absorbtion capacity, where as the demand on USD is always dynamic and could be increased.
Therefore on a long term, I do think that USD will gain some value against the JPY without prejudice to any decision that can be taken by BoJ or FED.
on a short term, we may face a little correction in favor of USD, particularly because indicators stipulate that we are on the eve of an overbought level. However, this doesn't challenge at all the long term perspective that remain clear for me, even if Abenomics became a success with a 2% inflation in Japan, bare in mind that Japan was the first country to put into force QE since 1999. You will find here under the timeline since 1999.
Oct 2011 Boosts asset buying and lending scheme to 55 trillion yen
Aug 2011 Boosts asset buying and lending scheme to 50 trillion yen
Mar 2011 Boosts asset buying and lending scheme to 40 trillion yen
Oct 2010 Sets up 35-trillion yen asset buying and lending programme
Cuts overnight call rate to 0-0.10 pct
Pledges to keep zero rates until prices stabilise
Aug 2010 Further boosts fund for fixed-rate market operations
Mar 2010 Expands fund for fixed-rate market operations
Dec 2009 Creates fund for fixed-rate market operations
Dec 2008 Cuts overnight call rate to 0.10 pct
Oct 2008 Reduces overnight call rate to 0.30 pct
Feb 2007 Lifts overnight call rate to 0.50 pct
July 2006 Ends zero rate policy
Sets overnight call rate at 0.25 pct
Mar 2006 Reverts to policy targeting interest rates
Overnight call rate effectively set at zero
Mar 2001 Adopts "quantitative easing" policy
Feb 2001 Cuts overnight call rate to 0.15 pct
Aug 2000 Ends zero rate policy
Sets overnight call rate at 0.25 pct
Feb 1999 Adopts zero rate policy
Pledges to guide call rate "as low as possible"
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