The Japanese Yen has been trading in a huge 2% range in the Asian session on speculation on the size and type of stimulus from Japan’s Ministry of Finance (MoF) and central bank.
Comments from Japanese finance minister Tara Aso that the government was still working on the size of the stimulus plan saw the Yen strengthen driving the USD/JPY exchange rate down 1% to 104.60.
That’s where it opened the Asian session but after grinding its way up to 105 for most of the morning the Yen weakened sharply and USDJPY climbed to 106.50 on reports that the size of the Japanese stimulus package was going to be 27 trillion Yen ($US265 billion on current exchange rates) and that the MoF was planning on issuing a 50-year bond.
MarketWatch reported insiders saying “Japan is considering issuing 50-year bonds for the first time, the longest maturity of Japanese government debt in the postwar era, to take advantage of the ultra-low rates resulting from the Bank of Japan’s monetary easing”.
That was a seen as a possible step toward the delivery for the now widely-anticipated helicopter money traders have been expecting since former Fed chair Ben Bernanke – famous for his 2002 speech which advocated Milton Friedman’s idea of a helicopter drop of money – met with prime minister Abe and BoJ governor Kuroda recently.
But the MoF has subsequently denied that it is planning such an issue which caused USD/JPY to collapse around 100 points.
A short time ago USD/JPY was trading back up at 105.53 from just above 105 as traders await the formal announcement by prime minister Abe in the next few hours that the stimulus package will indeed be around 28 trillion yen.
Here’s the latest 15 minute chart:
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