Dont-Look-Up

Everyone knows weekend are for wars now and nobody would have placed a massive long oil trade in the last minutes of trading on Friday without strong information on a significant escalation beyond the current level of daily military confrontation in the Middle East coming soon

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日本銀行は身動きが取れず、 日本銀行は最悪のシナリオについて議論した。 ドルの暴落、あるいは基軸通貨としての地位の喪失は、世界恐慌をはるかに凌駕する事態を引き起こす可能性がある。 日本と米国は、現在の体制を何としても守ろうとするだろう。 これから新たな秩序が生まれるかもしれないが、その移行は苦痛を伴うものとなるだろう。

GOVERNMENTS ARE SELLING BILLIONS OF DOLLARS TO STOP THEIR CURRENCIES FROM CRASHING And the US government may be also selling USD to support them. Last night Japan and South Korea both sold US dollars in the open market on the same night. This is something which has rarely happened in the modern history. Japan bought yen and sold dollars in the New York session, its first intervention in 3 months. USD/JPY fell 2.4%, its biggest single-day drop since January 2023. South Korea sold dollars the same night. The won rose 2% to a 9-month high. Last month it was at a 17-year low of 1,561 per dollar. But why now? Because their currencies are falling at a record pace. The yen hit a 40-year low below 163 this month. The Iran war pushed oil up, and a weak currency makes every imported barrel cost more. But Japan has been doing this for years. What's important is US Government's involvement in this. Nikkei reported that US authorities conducted rate checks on the yen, which is when a central bank calls dealers to ask for exchange rate quotes. Central banks normally do this right before they intervene. This is not the first time this year either. Back in January, the New York Fed reportedly ran a rate check with major banks, and the yen jumped 1.6% in a day on intervention speculation alone. The yen problem has been on Washington's desk all year. Japan's top currency official Atsushi Mimura went on record: "We are receiving support from the United States that goes beyond psychological support." When Asked if that includes rate checks, he said it "would include that as well." Treasury Secretary Scott Bessent reportedly said the yen "seems very undervalued to me." None of this confirms the US sold dollars itself. But rate checks plus that statement means Washington at minimum approved the operation. Why does US involvement change everything? Because Japan alone always fails. Japan intervened solo in 2022 and 2024. Both worked for days, then the yen made new lows. This April and May it spent a record 11.7 trillion yen ($73 billion). The yen still fell to a 40-year low. Coordinated action is different. In 1998, Japan's solo interventions failed until the US joined and the yen stabilized. In 1985, the Plaza Accord pushed the dollar down nearly 50% over two years. Japan has done coordinated intervention with the US or G7 only 5 times since 1985, and most of them marked the turn in the dollar. And it's not just Japan and Korea. India has been fighting the same battle alone: - Around $7 billion sold in one day last week, some bankers say $8-9 billion - $9.76 billion net in March, $8.94 billion in April, $6.1 billion in May - Around $53 billion net sold in FY26 The rupee is still down almost 6% this year. Today also showed how stuck Japan is. The BOJ held rates at 1% even though its own forecast says inflation runs at 2.5% this year. One board member voted for a hike and lost 8-1. The government doesn't want higher rates because of its own debt costs. Within hours of the hold, the yen fell back above 160. For assets, there are two sides to this. Short term, yen strength is a risk. Hundreds of billions are still borrowed in cheap yen and invested in stocks and crypto. When the yen jumps suddenly, those loans get repaid by selling assets. In August 2024, one small BOJ hike sent Bitcoin from $64K to $49K in six days. Long term, dollar weakness is the upside. The DXY fell 0.8% below 100 on Thursday, its lowest since June 17, helped by US Q2 GDP printing at 1.5% against 2.1% expected. If interventions like this continue and the dollar keeps weakening, capital moves toward hard assets and risk assets. What happens next depends on whether the US moves from rate checks to actual selling.

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