BOJ's refusal to normalize its ultra-loose stance is sending JPY pairs higher along with the NIKKEI225, also following a roaring American stocks market (SP500, NASDAQ...) which has all the hallmarks of an irrational speculative bubble.
As others have said, this is a really dangerous situation as macro fundamentals are not good, with Germany in a recession, Singapore showing a contraction of GDP, China disappointing and plenty of other signs such as Yield Curve Inversion etc.
I'm fairly certain that the BOJ is hoping for the recession in the USA to kick in. This is usually bullish for the Yen, as it is historically performing well during difficult times. Nevertheless, as a an American recession is getting delayed, so does the Yen appreciation... Unless the BOJ finally give up on the Yield Curve Control, which could precipitate things. But only a very high inflation or extreme depreciation of JPY might force their hands. So far they've relied on punishing speculation by direct intervention, sending a "message" to traders that enough is enough at 1 USD = 150 yen.
The probability is low but Japan is risking a "Turkification" of its economy if things go wrong, with a roaring stocks market and a currency depreciation out of control. Japanese people already are pivoting towards stocks and foreign currency accounts to fight inflation in stark contrast to the very conservative way of saving which is just leaving some Japanese Yen on a bank account.
More likely, we should finally see an appreciation of the Yen if the American stocks market begins to sell off, which should begin soon... Next week?
AUDJPY might show a clean setup at the high.
As others have said, this is a really dangerous situation as macro fundamentals are not good, with Germany in a recession, Singapore showing a contraction of GDP, China disappointing and plenty of other signs such as Yield Curve Inversion etc.
I'm fairly certain that the BOJ is hoping for the recession in the USA to kick in. This is usually bullish for the Yen, as it is historically performing well during difficult times. Nevertheless, as a an American recession is getting delayed, so does the Yen appreciation... Unless the BOJ finally give up on the Yield Curve Control, which could precipitate things. But only a very high inflation or extreme depreciation of JPY might force their hands. So far they've relied on punishing speculation by direct intervention, sending a "message" to traders that enough is enough at 1 USD = 150 yen.
The probability is low but Japan is risking a "Turkification" of its economy if things go wrong, with a roaring stocks market and a currency depreciation out of control. Japanese people already are pivoting towards stocks and foreign currency accounts to fight inflation in stark contrast to the very conservative way of saving which is just leaving some Japanese Yen on a bank account.
More likely, we should finally see an appreciation of the Yen if the American stocks market begins to sell off, which should begin soon... Next week?
AUDJPY might show a clean setup at the high.