Australia Focus : Thank You BoJ, No Thank You Fed !


Yes. Thank you BoJ, Kuroda, GPIF, Aso and Abe.

If you want to know what is the shape of things to come, just take a look at the relative performances of the various currencies versus the JPY after the BoJ shocker on Halloween.

Currency performances vs the JPY 29-31 Oct 2014

Currency performances vs the JPY 29-31 Oct 2014


There is nothing much to say for Australia now except that it will be at the mercy of the markets (or BoJ) for now.

The main beneficiaries of the JPY carry trade would be the currency and bonds, say nothing of Reits.

aud reits

And Australia would be an immediate beneficiary due to their long standing investment relationship status as we would expect a slower warming up to the other GPIF targeted investment destinations.

I am not giving up on the bonds or the stocks that I like in Australia and we have the RBA next Tuesday at 1130 am SG time where they will definitely talk themselves down. It will be a good time to load up some ahead of the ECB on Thursday where the ECB will be hard pressed to deliver a punch of equal measure to the BoJ, although strangely, BoJ’s USD 100 bio worth of extra stimulus (over 1 year) does not do justice to the ECB’s 1 trillion (over 2 years).

My EURAUD, AUDSGD and AUDCAD are on target and my amazing AUDUSD did touch that elusive 0.89 (ho ho ho) right before the FOMC.

I have no keen sense on the currency for the moment except for a wild call for AUDJPY at 100.00 and AUDNZD closer to 1.14.

But then again, it now all depends on the BoJ which I have little confidence in.

Good luck !

AUD Bond Prices (Indicative)
aud bonds