DislikedThanks for the clarification. Really insightful as I hadn't looked into it in that sense. Another question if you could possibly answer - supposing that BOJ do easing on the scale of the feds, and the US economic situation does improve - is this a risk on or risk off scenario? What I mean to say is that, when economic conditions are good in various states, does this improve risk sentiment? Further, does this mean it is essentially a better form of intervention in the grand scheme of things than the silly ones BOJ have done in the past.
For...Ignored
QuoteDisliked3. The USD is and will be King going forward as the US leads the global recovery and will likely be the first to tighten monetary policy.
If everyone else is easing and the US starts tightening, then capital will flow to US assets. Risk-on/Risk-off is all about safe haven flows which are flows in and out of US and/or Japanese government bond markets. In the scenario outlined in your questions, whilst the flows of capital will be to the USD, they will not be to the bond markets as safe haven flows, but rather to corporate equities and some commodities. Capital seeks yield and if that yield is better found in the US, then that's where the capital flows to.
Those who say it cannot be done should not interrupt those who are doing it