Yen crosses bid to the boots on corporate tax cut, pension funds headlines

FXstreet.com (Barcelona) - The Japanese Yen has been a falling knife in the past hour in a rare combination of two 'Yen bearish' headlines, first Kyodo reporting a decision on the corporate tax rate cut being very close, while feeding the selling impetus was the fact that Japan's $1.16 trillion national pension fund chairman is due to give a conference at 18:00 Toyko time.

Any move by the country’s pension fund to re-allocate its assets by reducing purchases of Japanese government bonds and increasing them in local stocks and riskier assets abroad, is bullish equities and some investor might be anticipating that.

Japan's retirement funds may be further moving from overly conservatively investments - 10 year note does not make any significant return courtesy of BoJ easing vs international standards - which might be finally forcing changes to the core allocation structure by increasing their risk in the amount that goes into stocks and foreign bonds.

The news have seen a huge flurry of buying activity in the Nikkei, which has resulted in the Japanese Yen taking off too, as the correlation between both assets remains extremely strong.