Twin Policy Meeting Impact to Amplify as Liquidity Drops: ChartBy
Japan’s holiday calendar this week is set to sap liquidity further, with investors already holding off from making large wagers before Wednesday’s twin policy decisions by the Bank of Japan and Federal Reserve. Worsening liquidity means any transaction -- no matter how small -- can hit markets disproportionately hard on Thursday, when Japan markets are closed for a holiday. The gap between one-week and one-month implied volatility in the dollar-yen cross spiked last week to the widest since just before the last BOJ meeting in July, as the shorter tenor surged.
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