What's Driving the Currency Markets?

The video discusses the market's reaction to disappointing Japanese economic data, emphasizing the need for fiscal rather than monetary policy responses. It highlights the limited control central banks have over currency movements, using the New Zealand Central Bank as an example. The concept of reverse carry trade is explored, where capital gains become more attractive than interest rate differentials. The discussion concludes with the idea that Japan needs a fiscal policy response to drive foreign investment, as monetary policy has reached its limits.

What are the implications of the BOJ's negative rate policy on investor behavior?

In what ways does fiscal policy need to respond to the current economic challenges in Japan?