Audio: ECB and BOJ face crisis

Nick Beecroft, senior markets consultant at Saxo Bank, discusses the challenges facing the European Central Bank and the Bank of Japan

In this exclusive open-access audiocast, Beecroft says with the inevitability of a Portuguese bailout and a looming crisis in Spain, continued demand for liquidity from the ECB will again lead to a delay in rate hikes, further undermining the euro.

Meanwhile, Beecroft warns that the BOJ, facing a wholly different crisis, runs the risk of over-extending quantitative easing in response to an aggressive yen rally on repatriation flows; or anticipation of the same.

"The BOJ may crank up the printing presses to such an extent that investors become convinced they are witnessing the monetisation of Japan's huge government debt," says Beecroft. "This could lead to a dramatic sell-off in JGBs, and down the road could see inflationary problems, or anticipation of inflationary problems."

The result could see yen trade at around ¥100 against the US dollar.

Speaker bio:

An honours graduate from Oxford University, Beecroft brings more than 25 years of international trading experience within the financial industry, including senior global markets roles at Standard Chartered, Deutsche Bank and Citi. Beecroft was a member of the Bank of England's Foreign Exchange Joint Standing Committee. He joined Saxo Bank as senior markets consultant in May 2009.