Kuroda killing any hopes for free money

Posted Thursday, July 21, 2016 by
Skerdian Meta • 1 min read

The Bank of Japan (BOJ) chairman Kuroda popped up on the screens a while ago saying that there is no need to start the helicopter money programme like the one that ex FED chairman Bernanke started after the 2008 financial crises. He did say that they can add more stimulus in three dimensions though as well as highlighting that there are no limitations to monetary easing if needed. He also added that the BOJ is determined to get rid of deflationary mindset in Japan. 

Yet, the market was focused on the helicopter money and as soon as Kuroda denied it the Yen pairs started a freefall. USD/JPY declined more than 200 pips initially although it has recovered half of it now. EUR/JPY fell around 250 pips and GBP/JPY lost more than 300 pips. 

USD/JPY fell about 200 pips right after Kuroda´s comments

The forex market had built high hopes on the helicopter money programme. It all started when Bernanke met with Kuroda and Japanese prime minister Abe. Once Bernanke set foot in Japan everyone implied that he was there just for one reason, to guide the Japanese how to initiate the programme. But Kuroda popped that bubble today. How often have we seen the market build up expectations on all sorts of ideas only to be disappointed a while later?

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