This is via the folks at eFX.
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- "While we think the BOJ making a YCC move imminently has decreased, we also think that the BOJ will never make a move when the market expects it," TD notes.
- "In line with this, we think it is worth holding some small JPY upside into this month's BOJ meeting though we recently stopped out of our USDJPY short (we will consider re-engaging however)," TD adds.
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Huh. The BOJ seeking lack of credibility as a deliberate objective? Go figure. TD seem to be on the right track though. Remember when Bank of Japan Governor Kuroda back in December shocked markets with a widening of the yield curve tolerance band:
And just a few weeks ago, BOJ dep gov Uchida:
If the BOJ want to send markets into a tailspin of volatility, so be it, I can see the arguments for central banks not talking, and talking, and talking, so much. But to have Japanese officials then lecture everyone about the importance of markets moving in a stable manner on the basis of fundamentals is just pompous claptrap. Monetary policy IS a fundamental.
Here's a pic of the 7 big-figure drop in USD/JPY in the hours following the BOJ December announcement.
