Expectations are rising on both the fiscal and monetary fronts in Japan. Actually, they may be combined. Last week, Ben Bernanke’s visit to Tokyo inspired incessant talk about helicopter money, or technically put “perpetual bonds”. The freshly printed money would be used for a stimulus program worth 10 trillion yen.
And now there is talk about 20 trillion yen. This is something like 190 billion USD. A significant part of the money will go to infrastructure spending. This could be approved in August.
The initial talk triggered a gradual rally from the 100 handle to around 105 and the most recent talk helps the pair push even higher. The high so far is 107.49, just short of resistance at 107.65. Further resistance awaits at 108.40.
The move is also helped by a general “risk on” sentiment. Brexit does not seem so terrible. There is some calm for now.
Here is how it looks on the chart.
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