Another Thursday sees another stock market crash in Japan, and yet again, USD/JPY is beaten.
The Nikkei index dropped by 5.15% to 13,589.03 points, and USD/JPY dropped from the 101 area to as low as 101.52 before recovering a bit. The 100 line is not far away.
The previous Thursday saw a bigger fall of 7.32% in the index, and it was backed by a disappointing Chinese indicator as well as the initial talk from Bernanke about tapering.
This time, it could be related to end of month flows, and also to tapering: Eric Rsoengren, a known dove, also opened a door to the hawkish side. While QE tapering is dollar positive, the negative impact on the stock market has the opposite effect on USD/JPY.
Another factor boosting the yen is the weekly report about Japanese bond and stock buys abroad / foreign bond and stock buys in Japan. Once again, Japan buying foreign bonds has fallen: this time by 1117.3 billion yen.
It is important to note that May has seen big moves, especially a stronger dollar, and some correction of these moves is also happening.
For more, see the USD/JPY forecast and here is a live chart of Dollar/yen:
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