FX Thoughts : USDJPY and Unhappy Whisky Drinkers

We have the US Non Farm Payrolls tonight and raining on this SG50 public holiday when admissions to numerous public attractions are free which is a shame.

Thus the best thing to do would be the just stay indoors and surf the net which is what I did until I saw that a certain whisky sale was advertising the 12 y.o. Yamazaki at S$200 = ON SALE ?

You got to be joking because I distinctly remember paying S$60 for it at Meidiya 5-6 years ago and then S$100 just last month at the  club.

So I did some digging and found this amazing inflation alert chart.

yamazaki inflation

28% in a year when the JPY has weakened over 20% ! BoJ, where are you ?

Since they replaced baby diapers with adult diapers and strollers with hearing aids in the CPI basket last month, I think we should see inflation improve in the months ahead as the central bank report card reporting team calls the BoJ a fail.

“The truth is, Kuroda’s team has gotten as far as it can with its two huge monetary infusions since April 2013. In addition to buying about $700 billion of government debt annually, the BOJ is also pumping money into everything from asset-backed securities to exchange-traded funds. The results can be seen in the 56 percent rally in the Nikkei, but not in the areas needed to generate a sustainable recovery like sizeable wages gain or capital investments by huge companies. In other words, everything has gone just as Kuroda’s predecessor Shirakawa predicted.” http://www.bloombergview.com/articles/2015-07-12/failing-on-inflation-japan-fudges-the-numbers

Fudging is in the news it would appear as Toshiba admitted to fabricating 30% of their last 7 years of profit and got axed from the Nikkei 400 Index.

Complete that with the Japanese cabinet’s approval ratings plunging to their lowest levels since Abe took office in what would be the longest stint we have seen for a Japanese Prime Minister in a long time, the IMF warning that debt levels surging to triple GDP is “unsustainable” and the BoJ stopping at their tracks on further stimulus today, it would appear we are hitting a pit stop for the USDJPY.

From the FT.


Note that the USDJPY is back to the same levels when Abe resigned back in 2007 – a coincidence, no doubt.

The only support for USDJPY would be the US Fed and to a lesser extent, the Nikkei purchase of FT for US$1.3 billion ?

Thank goodness I have stopped drinking Japanese whisky these days, mainly because the quality has come off a lot, in my opinion, comparing very poorly with their past vintages in addition to other single malts, at half their prices. Perhaps contaminated by Jim Beam which was acquired last year. Yet who can blame producers for raking in such profits ?

They better hurry and ship out more of those bottles at the expense of Japanese consumers because it does look like the risk for the overdue USDJPY correction is building up because Suntory shares cannot hold up the Nikkei and it may be time to put on an option for that 120 target.

usdjpy top

Happy SG50.