Here's a bit of an update from the Bank of Japan and comments from Japan's largest brokerage on the loss of faith in the bank.

The BOJ yesterday released its quarterly regional economy report. In a nutshell:

  • The bank cut its assessment for two of Japan's nine regions
  • Said Brexit concerns (specifically market gyrations in the wake of the vote) could hurt consumer sentiment
  • Again mentioned its concern on the strong yen
  • And concern on weak consumer spending
  • Warned on more and more Japanese firms having lost pricing power, delaying price rises due to the fall in demand

Meanwhile, Nomura says investors have little faith the BOJ can weaken the yen

  • They say the yen / gold correlation is now at its highest since 1978 the report
  • mention the desire for safe haven assets following the Brexit result, along with negative interest-rate policy

From Nomura (Tokyo) FX research:

  • Gold is a currency with no central bank
  • If you simply want to sell the dollar, the easiest way is to buy gold,
  • Investors are exremely sceptical about the BOJ's ability to impact the exchange rate "so now the yen is the same as gold"