BoJ Ready for Helicopter Money?

Lior Alkalay - Contributor - Forex

Helicopter money, that’s the big talk in the past week. The term helicopter money refers to a case where the government hands out money to citizens and funds it through printed money. The last time helicopter money was relevant was back in 2009. That’s when Ben Bernanke, then Federal Reserve Chairman, literally opened up the printing press and poured massive amounts of liquidity into the bond market, in tandem with a massive fiscal stimulus plan from the US government. Now, investors are speculating that the BoJ is ready to unleash a similar move, in coordination with the Abe government. And with the BoJ monetary policy meeting scheduled for this Friday, investors have high hopes. Are these hopes in place?

Kuroda Vs. Abe

In the past several months, BoJ watchers have been routinely underwhelmed by the BoJ’s statements. The BoJ slashed deposit rates to -0.5% and increased its QE program to a whopping ¥80 Trillion. But since those two announcements deflation has returned, yields on Japanese Government Bonds plunged to record lows and Japan’s GDP growth marked a modest 0.1% annually. And still, no monetary bazookas have been announced. Continue reading "BoJ Ready for Helicopter Money?"

Are All Yen Bets Off?

Lior Alkalay - Contributor - Forex

Is the short bet on the Yen over? Well, maybe not when it comes to trade vs. the Dollar. But as far as other weaker currencies, that's a different story. As it relates to the Euro, then indeed, the long bet on the EUR/JPY might be over. And here's the reason why.

Inflation might be coming back

That's a rather straightforward statement, but the Bank of Japan believes that inflation is inching higher. And while it's not as clear-cut a case a, let's say in the US, still there is a basis for it. When calculating Japan's inflation, excluding volatile prices such as food and energy, inflation gained 0.6%. Now, while that's still low, it's a move in the positive direction.

Moreover, a quick look at the inflation figures per segments and you can see most segments have experienced price increases. That is a mildly hawkish sign. It must be pointed out that the BOJ is about to change the way it measures core inflation. Going forward, the BOJ will publish core inflation figures, calculated both with and without energy prices. However, the BOJ will focus on core inflation excluding energy prices. Previously, by including them, it distorted the inflation figures into the downside. Continue reading "Are All Yen Bets Off?"

JPY Set For An Abrupt Move

Lior Alkalay - Contributor - Forex

Over the past few weeks, the Yen has been softer against its European peers, e.g. the Euro and the Pound Sterling, as risk appetite gradually made a comeback. Yet against its American peer, the US Dollar, trade has been rather subdued. The Dollar and Yen, the world's most sought after safe haven currencies, move generally in tandem. Because investors have had some difficulty choosing the front runner between the two, it has resulted in a sideways moving USD/JPY pair. The combination of a soft patch in the US economy and uncertainty over Japan's economic future has also made it difficult for some market movers to assess the next trajectory for the Yen. Yet, in either case, that is still a mere projection with no tangible evidence (yet) to tilt sentiment either way, in favour of the Yen or in favour of the Dollar. However, that might soon change; moreover, the reaction in the USD/JPY could be abrupt, swift and for some, devastating. Continue reading "JPY Set For An Abrupt Move"