Dollar/yen has responded to horrific weakness in data which has continued over the last business day in Japan. Machinery orders were a bit of a horror story.
The decline seemed to kick in around the time of publication of data on machinery orders which is a key indicator of capital expenditure. It was well below forecast, down 12.5 percent on the month.
The Bank of Japan is fiddling at the edges with existing policy, but this isn't a quantitative easing, ... a fairly significant set of steps.
That kicked into the equities market. Around 25 percent of bank profits come through bond holdings. If they are losing these capital gains then the banks are hit. People then started selling the yen because I think they started fearing things are not smelling too good here.
The market wanted to rally, ... But I don't think anything fundamental has changed.
It started in the bond market which has been selling off aggressively in recent days.
They're shorting the yen and that's the right attitude. There's a feeling we're reaching some kind of endgame.
These numbers are much better than anticipated. It is difficult to explain from the data we already have.
There is a lack of confidence but there were not any fundamental developments at all.
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