The Yen Distorts the Market

Japanese politics is causing distortions and uncertainties in the financial markets. Extremely volatile movements of Japanese bonds, caused by the inflationary expectations created by the BOJ, have warned the government of that country, which is trying to calm investors with ongoing interventions and the presentation of a growth program, in addition to monetary policy, which among other things include the possibility that the state pension fund could invest in riskier assets such as equity markets.

But the program has not convinced the market and the Nikkei has fallen back into a movement that has become intermittent, but unstoppable.

The movement of the currency, also very erratic, seems to be a turn of the trend. Therefore, it is highly likely that yen's crosses against the dollar and the euro definitely break the 100 and 130 levels.

In the case of euro, the movement could be larger if, as seems, there are disagreements over European banking union and the perception of risk is heightened.

EUR/JPY chart: