Managers Approaching Japan Vol With Increased Caution

The relationship between equity and fx is no more prominent than that seen in the Japanese market. When the yen pops or crashes, the Nikkei responds with the inverse. As the Bank of Japan throws everything at the yen in its bid to stoke inflation, many market officials are now looking at the Nikkei cautiously. Given the yen’s “flight-to-quality” status during a global downturn, Nikkei equities could see an outsized impact compared to other major world indices and those shorts could be difficult to exit. Daniel O’Leary reports.