It’s tough being a central banker in this day and age, particularly if you fail to deliver on lofty market expectations.
Haruhiko Kuroda, governor of the Bank of Japan, is one man who likely understands this more than most today.
After stunning financial markets for the second time in three months yesterday, this time for not easing monetary policy as opposed to January when it did, the Japanese yen has soared over the past 24 hours, doing little to help spur on inflationary pressures that Kuroda and the BOJ board so desperately desire.
On Thursday the USD/JPY fell 3.02%, the largest percentage fall seen since March 16, 2011. That was when global markets were in free fall over the potential for nuclear meltdown at the crippled Fukushima nuclear plant.
Now, with Japan on holidays, the yen is continuing to surge, with the USD/JPY dropping to as low as 107.09 on Friday, a low not seen since October 2014.
Here’s a chart that everyone will be talking about today, the dollar-yen.
Given the reaction in the yen to the BOJ not easing policy yesterday, and that seen in the New Zealand dollar to the same stance adopted by the Reserve Bank of New Zealand just hours earlier, there’s more than a risk that a similar outcome could arrive for the Australian dollar next Tuesday should the RBA do the same.