Difference of Opinion BOJ and MOF

The Bank of Japan upgraded its assessment of the economy today, but Finance Minister Fujii opined that he thought that economic conditions were more severe than the BOJ appreciated. There was another are of disagreement. The BOJ suggested that the corporate bond and CP market were less dependent on the central bank. Fujii seemed much more sympathetic noting that there was still market interest.

This different assessment may help explain why a decision was not taken on the CP and bond purchase schemes that are set to expire at the end of the year at today's BOJ meeting. Many observers were looking for some signal about official intentions.

Of course, the MOF office was quick to point out it respects the BOJ independence. Intervention though is an MOF decision and the MOF has been perfectly clear. The bar for intervention is high and it requires more than a strong yen to justify it.

Over the last three days, using hourly bar charts, the dollar has been in a clear downtrend off the JPY90.45 high. That trend line comes in near JPY89.70 at the end of today's North American session. Dollar bears will likely sell a bounce toward there.