A versatile and talented Fisco Corporate Research Reporter's All-Purpose Column: Makabu's Eye | Episode 5: Foreseeing the "Post-Corona World" as Economic Activity Reopens [Mariko Mabuchi]

Profile of Mariko Mabuchi

Mabuchi, Mariko. 7 years of investing experience. At the start of Abenomics, she was entrusted with asset management at a company, spent three years as a full-time trader, and then became a corporate research reporter at FiSCo. Currently, she also handles marketing at Japan Cloud Capital. She graduated from Doshisha University Faculty of Law, holds a Master’s in Public Policy from Kyoto University Graduate School of Public Policy, and won Miss Doshisha in college.

Official Blog：https://ameblo.jp/mabuchi-mariko/
Twitter：https://twitter.com/marikomabuchi

*This article is a reprint/edit of an article from FX攻略.com June 2020 issue. Please note that the market information written in the body is different from the current market.

◆ Will the inverse correlation between U.S. stocks and the USD/JPY continue?

As economic activity resumes, the week starting May 11 saw U.S. stock prices fall and the Dow Jones Industrial Average decline by 645.9 points on a weekly basis, marking a two-week low. Meanwhile, the USD/JPY exchange rate moved in modest swings but remained solid, rising briefly to the upper 107s (as of May 18).

Looking at forex and stock markets, before the pandemic, when U.S. stock prices rose, the USD/JPY also rose, showing a positive correlation. Since March, the USD/JPY has shown an inverse correlation. This may be largely influenced by the monetary easing of the U.S. Federal Reserve (Fed).

Even when looking at the balance sheet ratios of the Bank of Japan and the Fed, the Fed’s liquidity provision greatly exceeds that of the BOJ. The inverse correlation between U.S. stocks and the USD/JPY is likely to continue for a while. As economic activity resumes more fully, identifying the timing when a positive correlation returns will be important.