ver recent weeks, the EUR moved moderately higher, while the JPY accelerated sharply, with USDJPY now nearing our USDJPY 105 year-end target. The negative reaction of the European and the Japanese equity markets to FX strength suggests that the two regions need policy stimulus, but this policy stimulus is now more difficult to deliver. Fiscal policies pose difficulties given high debt levels and the use of unconventional monetary policy including QE, and negative interest rates seem to have reached limitations. In the Eurozone and (more so) Japan, the reason the currencies have rallied has to do with the existing tools central banks have ... READ MORE
