Yen plays against rules

Yen plays against rules Fact that the Fed's policy is corrected is always perceived by the markets as a local catastrophe. This time, the reaction was quite positive  both bond and stock prices rose. But dollar blackmail does not work on the Bank of Japan: the yen has its cunning purpose.Global risks are too high to hope for a sustainable bull market, and new currency wars confirm this. On June 16, SNB shocked the markets by raising rates by 50 bp, and then BOE kept its promise (+25 bp). As a result, both currencies soared against the dollar, with the Swiss franc having its best rally against the euro since the 2015 flash crash. Inflation in Switzerland is only 2.9% (the highest since 2008), which is much lower than in the UK (9%) or the US (8.6%). Low inflation makes it difficult to maintain a high exchange rate, so the franc is ready to compete for a leading position in the currency basket.Even though Japanese inflation has exceeded its target levels for the first time in many years, BOJ stubbornly keeps its target rate at -0.1%. Traders supported the previous rate and the yen continues to fall.Japan intends to become a global supplier of cheap money, which, together with a fairly strong economy, could be a big problem for the dollar. The strong appreciation of the yuan against its neighbour is also having an impact on China's competitiveness. The yuan is back at 20 yen and is causing Chinese politicians to come out of their quarantine hibernation faster and more abruptly than they would like.There is no consensus in the market about when the regulator can intervene in the situation. The last time Japan carried out foreign exchange interventions to strengthen the national currency was in June 1998  at the level of 147.60. Probably, verbal methods of influence will be relevant up to zone 140-145.In any case, sharp movements in the yen are now contraindicated, although the priority of USD/JPY purchases is still preserved. Perhaps one day we will wake up in a world in which traders will prefer to peg international contracts to the yen rather than the dollar.Profits to yall!