The Bank Of Japan Didn’t Do It; China Did; Dollar Implications & A Trade Setup (Aussie)

Quotable

“Because here’s something else that’s weird but true: in the day-to day trenches of adult life, there is actually no such thing as atheism. There is no such thing as not worshipping. Everybody worships. The only choice we get is what to worship. And the compelling reason for maybe choosing some sort of god or spiritual-type thing to worship—be it JC or Allah, be it YHWH or the Wiccan Mother Goddess, or the Four Noble Truths, or some inviolable set of ethical principles—is that pretty much anything else you worship will eat you alive. If you worship money and things, if they are where you tap real meaning in life, then you will never have enough, never feel you have enough. It’s the truth. Worship your body and beauty and sexual allure and you will always feel ugly. And when time and age start showing, you will die a million deaths before they finally grieve you. On one level, we all know this stuff already. It’s been codified as myths, proverbs, clichés, epigrams, parables; the skeleton of every great story. The whole trick is keeping the truth up front in daily consciousness.”

? David Foster Wallace, This Is Water: Some Thoughts, Delivered on a Significant Occasion, about Living a Compassionate Life

Commentary & Analysis

The Bank of Japan Didn’t do it; China Did; Dollar Implications & a Trade Setup (Aussie)

Despite indicating the economy is weak and may be getting weaker, the Bank of Japan (BOJ) decided to pass on adding additional stimulus to the economy. One might think ¥80 trillion ($660 billion) a year in quantitative easing was enough, but a decent slug of economists expected more.  The yen, in a volatile session today, has rallied on the news.  But here is the payoff summary from The Economist:

Policymakers at the BoJ are also more aware of the risks associated with expanding monetary easing than they were a year ago. A weaker yen constrains consumer spending and raises costs for small- to medium-sized businesses. The bank recognises that the scale of its QE purchases is stifling the world’s second-largest sovereign debt market. None of that, however, will dent financial markets’ expectation that weak growth and sluggish prices will make further easing inevitable in the months to come.

USD/JPY Daily: Below 120.14 sets up 118.00 with potential to 112…above 121.72 sets up potential to 124.00…hmmm…

Click on image to enlarge

But here is the rub if the yen rallies sharply, the US dollar index likely fades.  Today we are seeing the dollar hit on weaker than expected personal spending and income…that being said, US 2-yr rates, which are a pretty good indication of dollar price action as it relates to US spread advantage, haven’t given back the gains they made on the Fed “Star Chamber” perceived language change on Wednesday.