Kuroda’s press conference up next 09.03.2018.

The main event took place last night with the South Korean envoy delivering the North Korean, and according to Trump accepted, request for talks( written or not ) to the White House. That and looking at the timing, a pretty good Tokyo fixing demand sent USDJPY 0.5% higher in the space of an hour, taking all the crosses with it .

Aso and the Steel lobby’s worries about the tariffs moved to the back stage. On that side things can still evolve as countries can negotiate the tariffs, which could well lead to Japanese exemptions in my opinion as US-Japan are tight allies. Abe has already said he would travel to the US no later than this month. Two good reasons: keep the pressure on NK and get Japan off the tariffs list. He may well succeed, providing he pushes Trump’s ball into the hole for an eagle pot on the 18th…

BOJ then : kept everything status quo , including the 8-1 vote with the usual dissenter Kataoka asking for more faster. Governor Kuroda confused the markets a bit lately, starting in Davos, with hints about possible adjustments to the YCC and/or monetary policy. Later denied , keeping the door open for 2019, tried to deny again… It’s confusethemarket.com that side but nothing that the Japanese central bankers hasn’t done before. As I said in the Davos’ case, he’s probablly sending out feelers to measure market reactions. Today he has a stick behind the door to err back to the dovish side, as real wages came off fastest pace in 6 months. Draghi’s style it should come out sooner or later during his press conference.

I was a bit to early in the short JPY position yesterday but remain on the sell JPY relief side of the market for now. Especially with fiscal year end around the corner, which may see some price keeping operations from BOJ’ side through ETF’s and keeping a firm pressure on yield curve as seen a few times in the past to keep JPY to the weaker side for the exporters to enjoy a decent rate to repatriate profits if needed. Historically USDJPY goes up more often than down in the latter part of March .

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Stay safe and happy hunting

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