The easy moves are over, or so it seems. The well-lit path to EUR/JPY gains that this market has bore witness to since last September could be nearing completion. The many yen funded speculative trades that investors entered into may now be at risk. The increased chatter of PM Abe’s “easy” policy rhetoric may already be hitting its political limit. While the EUR’s –2% fall from grace this week on the back of a plethora of negative Euro data is beginning to convince investors that we are perhaps entering a new leg of a EUR correction rather than something more perverse.
Compounding the EUR’s problems is that the regions peripheral spread tightening has probably maxed out. Even though the LRTO2 payback announcement was way less than consensus expected on Friday morning, any paying down early of the program will prevent banks from the region to want to own similar regional product. This scenario will again expose the EUR to further weakness and have this market sit up and take stock of Yen funded trades.
- China House Prices Rise 2.2 percent in January
- China Disagrees with Abe Comments to Washington Post about Territorial Disputes
- RBA Endorses Current Level of Interest Rates
- Bank of Korea Kim pushing Central Bank boundaries
- Currency Battle Brewing in Asia
- Buying Houses in China to be more difficult as China aims to curb speculation
- Asia Stocks Advance Again as Global Outlook remains positive
- Yen Inflates Imports as Japan Trade Deficit Swells to Record
- G–20 Goes Easy on Japan as Yen Continues to Weaken
- Japanese are Selling Huge Amounts of Australian Debt
- Japan Stimulus Supported by G–20
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