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Nikkei 225 in the spotlight as BOJ rumoured to end ETF purchases

In previous updates here I have noted the extraordinary level of Japanese equities synthetically held by the Bank of Japan. That means the BOJ currently effectively owns around 80% of the stock market via its holdings of ETFs. So, with the Nikkei rising above 40k in recent times that has delivered great profits for them. More recently the Nikkei 225 has dropped back from record highs and today it closed 101 points lower at 38,695. The Nikkei futures are slightly in the red and just now news has emerged which could be significant, not just for the Nikkei but also for the USD/JPY. According to a leading financial news wire, the BOJ is reportedly mulling the idea of ceasing its ETF purchases. Now I cannot confirm that is true, but merely report this news to you. However, if the BOJ was to end ETF purchases, that would kind of make sense, if they are about to terminate their current monetary policy stance, because all things being equal, that might be a negative development for the Nikkei. However, the USD/JPY has not reacted negatively to this report and that is because the same report notes potential capping of any bond yield rise by the BOJ at the same time. Hence, the USD/JPY is actually pressing to session highs right now, as it lifts above 148 once more 

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