USD/JPY - BoJ asset purchase already priced in?
Hey guys,
Made a killing the past few days on USD/JPY, and this has got me thinking; is this the BoJ's asset purchase plan priced in or not even yet? $100 billion+ per month (due to start in 2014) is no laughing matter. The government is also spending $1 trillion this year on infrastructure and other public works (anything to get inflation above negative).
Keep in mind that Japan in general has quite an unstable political sentiment, so I won't be too shocked if PM Abe steps down suddenly or voted out and the Abe plan is shot down by the new government.
What do you mean BoJ's asset purchase plan "due to start in 2014"? It's been going on for a few months now already. Sometimes feels like it's rinban time every single day (actually, it sorta is).
As to politics, yes, it's normally tricky in Japan. Ae's popularity has declined somewhat from its peak, last I looked. However, based on the recent performance of the economy, as well as the results of the Tokyo assembly elections, looks like Abe can do no wrong, at least for the moment.
I remain short JPY (not USDJPY, but similar) and think that we ain't seen nothin' yet.
Martinghoul what do you mean by we haven't seen nothin' yet? I personally think it'll be tough to pull up inflation from negative to +2, but then again it is a long term plan. Do you see USD/JPY crossing 105 or even 110? The current plan is not as big as the 2014 plan ($100 billion+ using rates from last week). So I'm imagining what that's going to do for the rate + mechanically added inflation (something tells me Abe is going to overdo it)
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