USD/JPY Dollar/Yen Daily Charts

The BOJ began their easing orgy in October, at the dollar/yen bottom at 77-ish, and the upside hit the afterburners in the last couple weeks as the rhetoric only heats up further with the BOJ planning to run the printing presses all out. This money is then taken out of the country and invested in Europe and the U.S., obviously the bulk of it to the U.S. where the equity markets experienced the upside thrust over the last few days. The BOJ is weakening the yen so the dollar/yen pair moves higher. The pair almost hit 100 last week, only a single hair away, before it stumbled under 99 on Friday. From 77 to 100 is a 30% increase in only five months; an obscene move for any financial instrument let a lone a currency.

Europe is not pleased since the Japan currency debasement makes Toyota, Honda and Nissan in better position and hurts European manufacturers and exporters. Draghi will need to throw his hat into the ring and start debasing the euro. The euro has been weak but not for the right reason. The yen is weakening against all major currencies including dollar and euro. This behavior is part and parcel to the ongoing currency war, the race to debase. There are over 40 nations involved in some type of debasement now. The shame of it all is that currency wars end in shooting wars.

The comparison chart shows the SPX in green, note the September-October top, and move to the November low for the stock market. The yen weakening began and helped fuel the equity rally along with the Fed easing. Simply watch the yen to forecast equity market direction; if the BOJ keeps pumping the easy money talk in the media the yen weakens, dollar/yen moves higher, and equities are moving higher; if the BOJ dials back the rhetoric the yen will strengthen, dollar/yen move lower, and equities move lower. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.