What to say of the USD/JPY? Just WOW! I’ve been harping on for weeks now how out of whack the pricing of the pair was being dealt considering that the US vs JP yield spread level was indicative of a fair value more close to 110.00 (check blue circles for reference of true value) than 114.00.
While the sell-off looks way overplayed and I am expecting some intraday relief rally, especially on expectations of a potential rebound in the S&P 500, this is a market that remains expensive even after a run 2x its daily ADR. Yes, that’s how much of a disparity exists in this market. It’s a convenient reminder that markets can deceive you for prolonged periods of time before a value re-adjustment.