How we suspect a few USDJPY traders (who are the most net long JPY on record) feel this evening...
After JPY's biggest daily plunge against the USD since October 2014's cluster of Central Bank efforts...
While the IEA has been urgently pushing an agenda of the oil market "rebalancing" in coming months in order to validate rising oil prices, the reality is that there are two parts to the equation: demand and supply.
Almost exactly one year ago, we wrote "Mario Draghi, Collateral Scarcity, And Why The ECB Will Soon Buy Corporate Bonds." 11 months later, the ECB confirmed this when for the first time ever, Mario Draghi said he would do purchase corporate bonds when he launched the ECB's Corporate Sector Purchase Programme (CSPP), confirming that with government bond collateral evaporating and the liquidity situation getting precariously dangerous and forcing moments of historic volatility (as in the April/May 2015 Bund fiasco), he had run out of other options.
A rumor of The BoJ doing something moar (helping banks with NIRP loans) was the apparent catalyst for today's epic USDJPY spike, but the kindling was a record position among speculative futures traders that USDJPY would continue to fall.
Today's 250 pips plunge in Yen relative the dollar is the largest since Oct/Nov 2014 when The Fed ended QE3 and BoJ stepped in with QQE2 (or 22).
For now, however, the machines have failed to get inspiration for stock buying euphoria from this usually positive carry pump...
Submitted by Michael McDonald via OilPrice.com,