The Bank of Japan's move to pump $117 billion more in stimulus into the Japanese economy looks a lot like Einstein's theory of insanity -- doing the same thing again and again and hoping for a different outcome, according to Reuters FX analyst, Neal Kimberley.

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LONDON, ENGLAND, UNITED KINGDOM (JANUARY 11, 2013) (REUTERS - ACCESS ALL)

1. REUTERS FX ANALYST, NEAL KIMBERLEY, SAYING:

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(QUESTION: The worst of the financial strains certainly seemed to be over. Several banks - Morgan Stanley, Goldman Sachs, JPMorgan - they're saying that's it on rate cuts from the ECB. All this has to be good news for the Euro, right? )
I think obviously the price action since with Mr. Draghi spoke would suggest that the market takes that on board. For me though, it's a question of relative economic performance between the Eurozone and the United States of America. Okay, we're not going to get another cut in benchmark rates, that seems obvious now. But where are the jobs going to come from? And the jobs, as Mr. Draghi said yesterday, are not being produced. Monetary policy, he said, is not producing the jobs because we got a lack of mobility in the Eurozone, well that's understandable - linguistic issues, blah, blah, people don't want to move from country to country. But if the Eurozone is not going to produce the economic growth that we would hope for and the US is going to do slightly better, then I prefer to be in the Dollar, and therefore, I'd be selling Euros up here.
(QUESTION: But that's been the case for the last 18 months, two years. The Eurozone economy has underperformed, the unemployment situation is much worse, yet the Euro's at 1.33.)
I don't disagree with you. It just seems to me maybe this is the year now where the jobless issue comes more to the fore. Yet I'm not quite sure how the periphery can keep going the way they are at a popular level rather than the financial crisis level. And therefore, I'm hearing good sellers of Euros, 1.3290, 1.3200. There are some bids around the 1.3240 as we're coming on air. There are some Euro/Yen selling goes as we are coming on air. But, Jamie, 1.3220, there's an awful lot of models looking to sell the break on the move back down.
(QUESTION: And the range, 1.33 on the top.)
I like it, 1.33 on the top, 1.28 on the base. I don't see the Euro going crazy one way or the other. I know that's bad news for the desks in London who are hoping for a lot more volatility over 2013 but to me, it's the last thing the central banks need is the Euro going crazy.
(QUESTION: Okay. If you're bearish on the Euro, you're even more bearish on the Yen. A new stimulus package from the Japanese government. They want the BOJ to target 2% inflation but if the Bank of Japan can get 1% inflation, how on earth is it going to get 2%?)
It's never stopped them from trying in the past, Jamie, believe me.
(QUESTION: And the Yen has strengthened. )
Jamie, the Yen, I wouldn't touch it with a barge pole at these levels. We've got 89.50 barrier options, that's going to be resisted. Above that obviously, the market wants to go for 90. Japanese exporters aren't selling Dollar/Yen at the moment. They're working at their budget rates, probably come in around 85.00. But the bottom line is, if it's going your way, why bother doing anything? Because if you sell it today at 88 and tomorrow it's 89, you've had the opportunity because of a big figure. So you wait for the market to turn before you do anything. So there's that. There's no sellers. If you talk about the Japanese banks, they're all aboard alike. On the other side of this, Mr. Abe's infrastructure, all the money's going to be spent on earthquake prev. You have got to use a lot of fuel to doing that sort of thing. The Japanese energy companies have got to buy a lot more Dollars against the Yen than they were prepared for. The Dollar/Yen looks bid to me. Now, monetary policy, Bank of Japan - it looks to me, it's like Einstein's Theory of Insanity - a definition of insanity: do the same thing again and again and hope for a different conclusion. It isn't going to happen. But if it does, if it does work this time, then the market will give the policymakers the benefit of the doubt and sell the Yen because that's what they know Tokyo wants. And if they fail, the market will probably assume that they've used every single policy lever at their disposal. It hasn't worked and therefore, the only thing that's left is to debase the Yen itself.'