Despite the BoJ exercising their best efforts to keep the Yen from strengthening too much too soon by holding the line on YCC, traders quickly looked through the messaging and concluded, given the current environment where bond traders will show little respect to YCC, FX traders were quickly off the mark selling USDJPY, which incredulously, after trading four figures to the top side traded another three figures back to the downside as traders re-engaged bullish Yen bets on the eventual demise of YCC. And given the current JPY bullish moment, would anyone be surprised if USDJPY did a 24-hour round-tripper?

The glaring problem for the BoJ is that they obviously don’t want to spend the equivalent of 6 % of GDP monthly intervening in the bond markets daily.

While most oil market participants have fully digested China reopening at this current level of industrial and consumer consumption, arguably, demand will get much better. Discussions are starting to revolve around the February 5th EU embargo on Russian refined petroleum products, where one would expect Russian production to wane, given a lack of tankers to redirect oil following the upcoming embargo. So, on the back of bullish China reopening impulse and likely drop in Russian supplies, oil prices could be catching an early flyer on the EU embargo updraft.

Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT