On October 5, Bank of Japan rattled the world's financial markets by lowering interest rates from "almost 0%" to "really 0%."
Global equity markets interpreted the news as bullish. (Although, can't you also argue that if a central bank is desperate enough to offer "free money," something is really wrong with the economy? Bob Prechter is right: Investors interpret news depending on how they feel.)
But it was currencies that BOJ was targeting: Specifically, the strength of the yen. Did they succeed? Here at EWI we're all about charts -- so take a look at this chart of the USD/JPY:
BOJ's previous attempt to stem the yen's strength came on September 15. (We wrote about that.) As the chart shows, the USD/JPY steamrolled right over that intervention attempt. And the October 5 interest rate decision hasn't bucked the trend, either.
"The U.S. dollar is testing its lows, levels that previously drew the BOJ into the market. Their intervention failed," -- told subscribers EWI Senior Currency Strategist Jim Martens in an October 6 intraday update.
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"BOJ would only succeed when the market is already poised to reverse course; only after a completed Elliott wave pattern," continued Jim. And, "...the environment is right for the dollar to bottom."