Horrible data out of Japan last night has indeed “capped” the recent move higher, but more importantly has “put a stop to further easing” til at least October, if not til early 2015!
The weakened Yen has pushed inflation higher as import costs on food and energy continue to rise. This is absolutely fantastic news for us , as it removes “yet another Central Bank” ( if indeed the Fed has stepped back at all – which I really don’t believe they have ) and opens the window for some “serious” medium term planning.
No BOJ printing til maybe even 2015? Fed looking to continue tapering? ECB more or less caught like a deer in the headlights? Hello! Contraction time is coming!
Trade wise, this could be a real break as we all know what it feels like “week after week” with markets hanging on every single word from Central Banks. More easing ? Less easing? Ping pong, ping-pong. The message is starting to come clear that the “easy money” is most certainly going to slow.
Strength in JPY has slowing been building since the beginning of the year, as the big boys quietly build for the entire first five months of 2014. Wow.
The market has been an absolute grind the first half of 2014 – and for very good reason. When major shifts in monetary policy loom in the “not so distant future” major market players start making “major market moves”. This takes time. A lot of time. So much time that you’d have to imagine a plan being put in place back in January and “only now” getting closer to a time to see it realized.
Has the “extended down period” in Gold been any different? Absolutely not. Big boys getting into position for the turn. Takes months. Many months, as they can’t move price “to fast” in that they essentially move prices “against themselves” with plans to buy in such quantity that when the time “finally comes” they are “so loaded” it rains money for the following year. This is how it’s done.
When I say patience is required. I don’t mean sitting on your ass waiting for something to happen. I mean working your ass off getting into position “before” something happens.