Big Week for the BoJ and...

by Michael J. Howell24. February 2013 22:58
Who becomes next BoJ Governor will likely be announced in coming days. The result may matter a lot to markets, at least as a signal. The BoJ has already expanded net liquidity provision well-above the critical Y40 trillion threshold. More importantly they have unusually done so when the Yen is weak. More, probably much more liquidity is coming. The Yen will drop further. Probably through Y100/US$: possibly to Y110/US$. A weaker Yen is part of our stronger US dollar story for 2013: it may also play a part in pushing the Eurozone towards another bout of financial volatility by squeezing competiveness another notch. In markets, there are no unrelated events.

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