” Stocks rose 11% today BUT consumer confidence fell to record lows and home prices plunged. President Obama said…”
We’ve seen our share of historic market moves in recent weeks, but today has to rank up there with the craziest. We had one of these a few weeks ago and the bounce failed to follow-through in subsequent days.
News that the BOJ could cut rates this week was the catalyst for all this as it combined with the gnawing fear in traders stomachs that the BOJ could use some of its massive FX reserves to undermine the JPY. When coupled with a potential rate cut, the Japanese authorities look like they will take whatever action is necessary to arrest the relentless climb in the currency.
With any luck, markets have completed their washout phase and the healing process can begin. If that is the case, look for EUR/JPY to continue its recover. Overcoming 127 in the cross and 103 in spot woukld be very hopeful signs for the markets writ large.
