With the Yen moving up, Japan will find it harder to compete. Quantitative easing always had a limited life, a reminder that when market confidence evaporates, we will all have to return to reality and rising costs for risk and debt:

“The Bank of Japan increased the size of its ETF purchases and expanded a dollar-lending facility, but avoided any big-bazooka policy changes in its statement issued overnight. Economist reaction has been one of disappointment that the bank didn’t do more. The yen strengthened to 103.56 to the dollar by 6:00 a.m. ET and Japanese bonds fell the most in three years after the announcement. (bloomberg.com)

“Traders were expecting either a big move by the BoJ or a total disappointment – overnight saw the most volatile yen trading since the financial crisis of 2008…. IG’s chief market strategist Chris Weston said this could be a sign that the BoJ may throw in the towel. It’s obvious that there has been a mini credit crunch in Japan and the banks have underperformed. Negative rates haven’t worked, in fact they have been a huge negative.” (www.abc.net.au)

“The efficacy of (BoJ) efforts is coming under scrutiny. Japanese prices fell in June at the fastest pace since 2013, leaving inflation even further below the BOJ’s 2% target. The Bank of Japan introduced negative rates earlier this year, a drastic action that should have weakened the yen and benefited Japan’s exporters. Instead, the yen has strengthened against the dollar for the year. http://www.marketwatch.com/story/yen-climbs-against-dollar-after-boj-fails-to-impress-investors-2016-07-29