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16 May 2013
Forex Flash: BoJ liquidity pump is helping stabilize JGB market - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that the BOJ has pumped massive amounts of liquidity into the banking system and this is helping stabilize the JGB market after the worst sell-off in a decade.
They continue to note that the BOJ injected JPY2 trln of 1-year money at 0.1% (LTRO?) on top of the normal operation that provided JPY800 bln. Consequentially, Japanese stocks initially rallied in Tokyo, with the Nikkei making new 5-year highs before reversing. They write, “The high flying JASDAQ was hit much harder by the wave of profit-taking, led by consumer goods and health care. The dollar initially came off in early Tokyo trading, testing the JPY102 area. Turnover was quiet and the dollar was largely confined to a JPY102.00-40 range. The euro is also trading a bit heavier against the yen. Support is seen in the JPY131.00-20 range.”
They continue to note that the BOJ injected JPY2 trln of 1-year money at 0.1% (LTRO?) on top of the normal operation that provided JPY800 bln. Consequentially, Japanese stocks initially rallied in Tokyo, with the Nikkei making new 5-year highs before reversing. They write, “The high flying JASDAQ was hit much harder by the wave of profit-taking, led by consumer goods and health care. The dollar initially came off in early Tokyo trading, testing the JPY102 area. Turnover was quiet and the dollar was largely confined to a JPY102.00-40 range. The euro is also trading a bit heavier against the yen. Support is seen in the JPY131.00-20 range.”