Stephen Innes
SPI Asset Management
In yesterday's FX report, we discussed how the USD/JPY is now navigating uncertain waters. It appears that market participants were sensing some underlying turbulence at the Bank of Japan, which was likely triggered by Monday's market tumult. We thought this uncertainty may cause the BoJ to remain on the sidelines during the initial stages of the Fed's aggressive rate-cutting campaign until the trajectory towards a U.S. soft landing or recession becomes more apparent. While I still anticipate a return to the sub-144 zone, with the BoJ possibly sitting out the next few rounds, we seem to have lost one side of the trade—the hawkish BoJ support that might have sustained the bullish JPY momentum.
I'm sure everyone was picking up on that turbulence which kept the Yen bulls at sea. And as sure as the click of a ball falls into a slot on the FX roulette wheel, the BOJ delivers a short rug pull to Yen Bulls for the sake of pumping stocks.
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