Thursday, May 9, 2013

$FXY's Crash Continues as $USDJPY Breaks Through 100, Energy Costs Rise In Japan

$FXY, the Japanese Yen ETF, hasn't stopped bleeding after the Bank of Japan on April 4, 2013 announced its plan to double the monetary base to 270 trillion yen by 2015 to achieve its 2% inflation target (¥270 trillion = $2.68 trillion with USD/JPY at 100.58). So where will FXY find some real near-term support, $90 or $80? Aren't oil and gas imports starting to get expensive in Japan? The yen's slide is definitely shaking up economic activity in Asia. And currency wars are just getting started (1, 2). The European Central Bank (ECB) just lowered rates, the Fed is still printing money with the federal funds rate at 0-0.25%, the Reserve Bank of Australia just lowered its key rate to a record low, the Reserve Bank of New Zealand "intervened in foreign exchange markets last month", the Bank of Korea lowered its key interest rate by 25 basis points, and "China's central bank signaled on Wednesday it was prepared to change its monetary strategy to fend off inflows of speculative capital, as Beijing struggles to control a tide of cash washing in from overseas markets" (Reuters). But the Bank of England held off on more QE today.

Source: StockCharts.com

Japan's Energy Costs Rise as Yen Weakens (WSJ)
A Yen for Nuclear Energy: Japan's Power Conundrum (CNBC)
Dollar Tops 100 Yen in Milestone for Bank of Japan Effort (New York Times)
Japan Current-Account Surplus Climbs as Abenomics Sinks Yen (Bloomberg)
Yen's Slide No Panacea For Japan Inc. (WSJ)
Yen to Help Japan Steelmakers Reclaim Share From Chinese Rivals (Bloomberg)
Yen slide set to slow, impact of Bank of Japan easing awaited: Reuters poll (Reuters)
As Bank of Japan Exports its Problems, Global Balances Shift (WSJ Money Beat)
Sony has profitable year, due to cheap yen (AP/USA Today)
Interactive Chart of the Yen's New Weakness (WSJ)
S Korea: it’s the yen, stupid (FT's beyondbrics)
Bank of Japan Sees Inflation Nearing Target in 2015: Economy - 4/26/2013 (Bloomberg)

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