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Bank Of Japan - Two Lost Decades

Bank of Japan:

The Japanese yen has been strengthening across the board since the beginning of 2010, even though the financial market seems to agree that the BoJ is prepared to slaughter its own currency to assure inflation. The economist Paul Romer said that “a crisis is a terrible thing to waste”, and this holds very true for the BoJ.

The central bank and the Finance Ministry have struggled to lift inflation and create growth since 1998, while the famous ‘lost decade’ is quickly transforming into ‘the two last decades.

This may be the time to act for the BoJ, to devalue its currency and help the Japanese economy. The 95.00 area on the Usd/Jpy does not look so remote, after all, to those anticipating a wild ride on Tuesday.

Global Market Update:

Gold has been moving lower in stair-steps, as investors downplay the market’s overall notion to risk. On the daily chart, the precious metal is trading in an area packed with important moving averages, which forces traders to favor straddle trading both sides of the current price.

The pattern of trade has been very interesting for the global equity markets lately. Positive news means equities move higher, while bad news equates to little or no movement for shares, but very little selling. Market participants are focused on the positives right now, with nothing able to block the upwards view. Equity index numbers are holding at their highest valuations since Sept 08.

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