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The Yen is attached to the Knee Bone, so what is the AUD attached to?

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Garpal Gumnut

Ross Island Hotel
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I must admit to being confused about the effect of the loosening of the BOJ's money policy on our market this afternoon.

All I know is that my Gold has shot up in price in AUD.

I believe the world's oligarchs and fund houses borrow in Yen because of low interest rates and invest in other things such as stocks and commodities and hope to make a profit with higher returns for a lower cost of borrowing.

Is this all there is to it ?

Perhaps @ducati916 and other members could comment and illuminate me on the significance of the BOJ's announcement today.

gg
 
I believe you are alluding to the Yen Carry Trade, and the possibility that it may be pausing for a while, or subject to conniptions.

Serious minor klepto's and assorted other Money shufflers prefer the Euro Carry Trade, whereby a briefcase of €500 notes nominally holds much more than one with the highest in US, being $100 notes or Yen, at Y2000 max.
 
well , to my inexpert eye ,

the BOJ has been buying Japan-focused ETFs ( to a significant extent ) to prop up the Japanese share market

but NOW it is buying Japanese sovereign bonds ...

WHAT WITH ??
is it newly printed money ( inflation ) , perhaps they are selling down US Treasuries ( Japanese interests are the largest foreign holder there ) are they using the funds normally injected into Japan-focused ETFs ( god forbid they are actually selling down those ETFs held )

OR are they playing with bond futures contracts ( like the Fed often does ) or are they doing something else ( Japan has a history of trying new tactics )
 
Our dollar is also attached to the knee bone........yen shot up, all major currencies went down. I was wondering with gold up, how well will gold shares fare tomorrow since our dollar is down? (has recovered a lot since this afternoon) I don't have a goldie to my name
 
Thanks @Dona Ferentes . It has a name that I was unaware of.

How Does the Yen Carry Trade Affect You?

The yen carry trade is when traders borrow the Japanese currency at a low-interest rate and invest it in a currency with a high-interest rate.
www.thebalancemoney.com

So how does this cause a fall in Asian stocks? I presume it is because of funds borrowed in Yen to buy Asian ( including ASX stocks ) may need to be paid back by converting older Japanese Bonds which will have lost value.

Or are there other dark matters involved in the consequences of the BOJ statement today, such as alluded to by @divs4ever above?

gg
 

ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com

am still trying to parse the consequences , hedge fund managers have been using increased leverage ratios in recent years there is a fair chance of contagion ( margin calls )
 
GG, you MAY be old enough to remember the banking malfeasance of Bank of NSW (now Westpac), from the late 70's through to the 80's.
These scandals involved Foreign Currency Loans (mostly borrowed in YEN at low interest rates), to unsophisticated parties that blew up a lot of businesses when the YEN/AUD pair shifted dramatically. ( see Foreign Currency Loan Scandal )
In the current climate, I doubt even the perennial sleazes at the Oz banks would be pushing them.
Mick
 
Most BOJ watchers had expected no changes until Kuroda's 10-year term finishes at the end of March.


"This was really out of the box," said Bart Wakabayashi, branch manager at State Street (NYSE:STT) in Tokyo.


"We're seeing them start to test the market about the exit strategy," he added. For dollar-yen, "we could see a break below 130. It's very much within reach this year."


The 10-year JGB yield jumped to 0.46% from the previous cap at 0.25%. It pulled equivalent U.S. Treasury yields higher as well, with the 10-year soaring to the highest this month at 3.711%.


The U.S. dollar index sank, dropping 0.35% to 104.25 and returning to the middle of its trading range this month of 103.44 to 105.90. The index measures the greenback against the yen and five other major peers, including the euro and sterling.


The index had been moving towards the top of that range before the BOJ announcement as investors continued to assess the Federal Reserve's message of higher interest rates for longer.


The yen's gains were broad, with the euro tumbling as much as 3.3% to the lowest since late September at 140.44 yen and sterling at one point also sliding some 3.3% to the lowest since Oct. 12 at 160.76 yen.


Against the dollar, the euro was flat at $1.0606 and sterling edged 0.07% higher to $1.2154.


The Aussie fell as much as 3.5% to 88.18 yen, a seven-month trough, and New Zealand's kiwi dipped 3.8% to 83.82 yen, a two-month low, respectively.


"You can look across any yen pair and they look very similar – strength to the yen to the detriment to the currency you trade it against," Matt Simpson, market analyst at City Index, wrote in an email.
Against the greenback, New Zealand's dollar dropped as much as 1% to $0.6301, a two-week low, extending earlier declines following a big drop in a survey of local business confidence.


The Australia dollar slumped as much as 1% to $0.6629 for the first time since Nov. 22


"From here is looks as though USD/JPY could be headed for 130 now that it has broken to a new cycle low."
 
Garpal Gumnut said:
I must admit to being confused about the effect of the loosening of the BOJ's money policy on our market this afternoon.
Click to expand...

Asia is the lowest liquidity session. We are approaching one of the lowest liquidity points of the year.

Markets are linked together more today than ever before. There are some especially weird links between the Yen, JGB 10Y yields, gold and 10Y US yields.

I suspect that the BoJ used the announcement as cover for intervention in Yen markets similar to that which they carried out on 22nd Sep and (more successfully) 21 Oct. Basically, wait for a known announcement window where participants withdraw liquidity in anticipation of the announcement, then massively jam the market right as the announcement comes out and run all the stops you can.

Volatility spreads across linked markets, further amplified by a trifecta lack of liquidity at the announcement/session/seasonal levels.

I would not read much more than that into it, no matter what crazy crap and media articles people are going to reply to you with.
 
i suppose the BIG question is ... will this cause vacationing hedge fund managers to spill their cocktails and rush back to the office ( or at least their laptop ) ??
 
Everything's rigged. The powerful and well-informed could regularly extract large sums of money from the market if they were prepared to set up special codes, middle men, a crooked brokerage firm (to alter trading records), some sort of money laundering process and anonymous offshore bank accounts in the Caymans. Would take a bit of work, but once set up, would be a money printing machine.
 
two important things to work out

1. is the ???? game rigged

if YES , how do you exploited that ?? sure you might only make pennies while the big fish will make billions , but pennies profit beats dollars lost ( imo)
 
divs4ever said:
two important things to work out

1. is the ???? game rigged

if YES , how do you exploited that ?? sure you might only make pennies while the big fish will make billions , but pennies profit beats dollars lost ( imo)
Click to expand...
Yes it's rigged!

You can't exploit it, but you can watch the volume. All participants leave a footprint.
 

Mr GG;

So the US Fed and the BoJ have worked hand-in-glove for decades. Remember the Plaza Accord?



So the issue is or rather (probably was) that:



(a) After hedging (currency costs) Japanese insurers and other big buyers of UST could not buy UST because of the negative yield; and

(b) Japan is a major oil importer.

Post BoJ YCC adjustment:



Which solves 2 problems.

Will the sales of UST now decrease? In theory yes, because oil in USD terms just became cheaper. Can Japan via Banks/Insurance/etc increase holdings of UST? In theory yes, because (we'll have to wait and see on this, the negative yield may now disappear).

It remains to be seen whether this holds or not.

Certainly the BoJ remains the largest holder of domestic JGBs, holding over 50% of all issuance. However, think of it this way: to continue to monetise the buying of JGBs as a % of total issuance, while inflationary, is still less inflationary in Yen terms because you are only monetising at any point in time a small % of total issuance. Madness I know, but that seems to be the thinking.

However, gold and silver think differently, perceiving it as net-net inflationary, particularly given that the Fed desperately needs buyers for the waterfall of issuance coming from the US Treasury.

Of course part of the impact seems to have originated from the *surprise* of this happening into very illiquid markets. LOL.

jog on
duc
 
I remember it as being Swiss Francs, but the idea is the same
 
Gringotts Bank said:
Yes it's rigged!

You can't exploit it, but you can watch the volume. All participants leave a footprint.
Click to expand...

Wow it's all rigged by powerful shadow people who set up special codes, middle men, a crooked brokerage firm (to alter trading records), some sort of money laundering process and anonymous offshore bank accounts in the Caymans...but they definitely show up in volume
 
some folks may take actions to conceal their illegal ( or immoral ) trading activities but that still leaves room for legal trading activity in a contrarian direction or in a parallel security or derivative ( which may not move as much but still result in a profitable outcome )
 
They have to buy and sell on the insider info. So yeh, that's probably how it works.

Did you know the FBI and the Democrats attempted to rig the last US election via social media? Everyone thought it was a conspiracy, but there it is in Twitter files. They also censored any doctor/scientist who spoke out about the efficacy and safety of the vaccines. Turns out that conspiracy was correct too.

You're very trusting, but things are rigged.
 
am still waiting for the full details on the JFK assassination , but i knew the narrative was rubbish as i watched the TV news back when i was in primary school ( where they stopped classes so we could watch TV news )

newsflash, the CIA have been rigging elections for decades it is only recently it has been obvious they are doing it in the US as well ( at Presidential level )
 
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