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  • The Yen -- This Time It's Different

    From seekingalpha.com

    Read Full Story at seekingalpha.com

    Even though our studies were telling us that the correlation between USDJPY and U.S. stocks was finally shifting -- see Why the Yen Is The New Alpha Market -- I'm still a bit surprised at how strong USDJPY has been the last two sessions, particularly in the face of U.S. stock weakness. The impetus for a strong USDJPY - weak Yen -- has been Liberal Democrat Party President Abe's insistence that if elected he will urge the Bank of Japan to consider unlimited printing of Yen to improve domestic conditions. USDJPY ended Wednesday's session up 1% while the S&P 500 ended down nearly 1-1/2%. Market followers ... (full story)

    • Guest

      IP XXX.XX.168.64
    • wow! great article that paints a simple and clear view of whats going on in these crazy markets. whoever wrote this obviously knows what they're doing and is a true trader

    • Subdude

      793 posts
    • Actually, this article is a mere statement of already known facts, nothing eye-opening. No real analysis either or an explanation for the headline.

    • Trout
      Trout's Avatar

        499 posts
    • thank you Guest. Before you can be a great trader you have to be a good analyst...the current long-term shift in the yen will very likley prove very significant for traders...

    • Trout
      Trout's Avatar

        499 posts
    • HI Subdude, this is one article in a series going back a month. I did not want to be repetitive. perhaps you will find the earlier ones more explanatory:

      http://www.forexfactory.com/news.php?do=news&id=390557

      http://www.forexfactory.com/news.php?do=news&id=393246

      The bottom line is if you are not following yen pairs yet you need to.

    • Subdude

      793 posts
    • Why do you think this is a long term shift? The runup in Feb-Mar was far greater, then it went almost all the way back to where it started, just about as quickly. You see, I am following Yen pairs.

      So why is it different this time? Does this mean you are bullish? Because of the political crisis? What levels are you expecting the pair to reach? Based on what indicators?

      None of this was laid out in your article, nor was it presented as volume III in a 3 piece saga. Do you find my criticism not constructive or something?

    • Trout
      Trout's Avatar

        499 posts
    • HI Subdude,

      I am a firm believer that the patterns already reflect the fundamentals -- a higher low on a year to year basis in USDJPY for example. And indicators are useless to me for forecasting given they are only based on direction and momentum, and not on pattern. It sounds like you want to know more about "cause", which I dont' focus on. "Effect", or execution, is a much easier mind-set to operate from for me. It is much easier to have faith that adequate rain and sun will grow the garden rather than spending all day tryiing to be a weatherman in hopes of yielding more fruit.

      After 30 years of studying markets I know this: that markets typify fractal geometry, and the human behavior that creates the geometric measurements we use to determine whether a market is bullish or bearish will not change in my lifetime.

    • jaygee

      1,992 posts
    • If i look at a weekly chart, i am not as impressed with the usd/jpy move. This is another in a series of "pops off the bottom" that haven't materialized. 2008, 2009, 2010, 2011. I do see the daily chart signals referred to and this week, price has moved above the last dtl i have drawn(80.23 or so this week) but i don't see this as a big up move on a weekly basis yet. I will disclose i am short this pair and not really comfortable with it, but in no hurry to cover them up because of this daily chart. I have seen some bottoming action in the past few weeks but not sure how much of it is large traders getting ready to move it higher or just short covers off of the BOJ news stream. just my 2c

    • Trout
      Trout's Avatar

        499 posts
    • Thanks Jaygee,
      What is so different about this time is the 180 degree shift in the correlation between the alpha S&P 500 and Yen. Also price behavior in oct in usdjpy was an orderly rally, characteristic of an asset class market. IMHO "the times they are a changin'"

    • moaf
      moaf's Avatar

        910 posts
    • Quoting Trout
      Thanks Jaygee,
      What is so different about this time is the 180 degree shift in the correlation between the alpha S&P 500 and Yen. Also price behavior in oct in usdjpy was an orderly rally, characteristic of an asset class market. IMHO "the times they are a changin'"
      so nothing less than buy USDJPY and be back in next 2 years to close them with mega profit

      It's fake again, take a look at EURCHF, I think we will be back below 80.xx in the middle of next week. I was for years bullish on USDJPY and lost tons on pips. Massive QE didn't change it, some political bullshiting (even not from BOJ) neither. Good Luck !!!

      (better wait to sell in next week)
    • Nov 15, 2012 3:55pm | Edited at 4:21pm
    • #10
    • Quote

    • Trout
      Trout's Avatar

        499 posts
    • [quote=moaf;6200253]"so nothing less than buy USDJPY and be back in next 2 years"

      Exactly

      The bottom line is I don't know what the future holds, but the method is telling me to take buy signals. I personally may know a little bit more than most posters, the method however -- measuring how the market organizes itself and trading with the majority of those patterns -- is the goods

    • marijan993

      130 posts
    • I agree it's a buy for usdjpy. Japan is an export oriented country, more than any other among G20. Therefore, they need weaker yen if they want their GDP to rise. The most important note for the usdjpy pair is Japans dispute with China over Diaoyu/Senkaku islands. Why? Japan is having trouble selling their products on Chinas market which makes American market even more important (which already is the most important for Japan).

    • Forexmint

      120 posts
    • Quoting marijan993
      I agree it's a buy for usdjpy. Japan is an export oriented country, more than any other among G20. Therefore, they need weaker yen if they want their GDP to rise. The most important note for the usdjpy pair is Japans dispute with China over Diaoyu/Senkaku islands. Why? Japan is having trouble selling their products on Chinas market which makes American market even more important (which already is the most important for Japan).
      weaker yen may also be seen as a double-edged sword for japan, owing its indebtedness.

    • mlfx
      mlfx's Avatar

      70 posts
    • Okay everyone, let's think fundamentals for a moment:

      Japan also knows that the Fed will do unlimited QE to soften the growing national debt payments and, to a lesser extent, effects of the so-called "fiscal cliff,"which won't even balance the U.S. budget!

      My question is: If both the US and Japan are easing at the same time, won't the effect on USD/JPY be muted? They are the top two ZIRP currencies already!

      And besides, who is going to buy all this national debt, as all the money printing presses shift into permanent overdrive? Remember, China has to print money, too.

      Maybe JPY will weaken first, then the USD will follow to stabilize, but not recover it.

      Anyone? Please?

    • mlfx
      mlfx's Avatar

      70 posts
    • I think it's possible that investor fear that the fiscal cliff will raise taxes on capital gains and dividends. These stockholders may flee the equities markets and gobble up tax-preferred assets, possibly some corporate or government bonds. This would unwind the risk-off rally which saw flows into the large-cap, high quality dividend stocks, such as Johnson and Johnson, that has recently lifted the Dow and S&P.

      We cannot see yet, what will happen. New correlations? Massive bond market bubble?

    • jaygee

      1,992 posts
    • it is a race to the bottom. Who is going to win? its a wash for me. up and down then up and down again. makes it tradeable. Europe seems to be at a disadvantage. Each country cant print their own anymore. o well. the fiscal cliff wont happen. no one wants it. we may drive to the edge and buy up the sold off equities in january for another run up.

    • Trout
      Trout's Avatar

        499 posts
    • Hi mlfx,
      better to speculate on buying dips in usdjpy and audjpy and not speculate on possible fundamentals and the possible outcomes.

      re: the bond market, I would speculate on the current direction continuing and the possibility of negative interest rates.

    • Trout
      Trout's Avatar

        499 posts
    • thanks Forexmint and Marijan

    • Trout
      Trout's Avatar

        499 posts
    • You know I see it clear as day why so many lose. They speculate on possible outcomes that make sense to them based on their experience -- as I used to -- and ignore what the market itself is telling them - which I used to do. Then they argue w/ the market gods over the outcome, as if it's not their fault that they lost their money -- at least I didn't do that...

      You can break the human behavior that moves markets down into two categories: educated and environment guided versus uneducated and mind guided...guess whose accounts grow and whose don't?

    • marijan993

      130 posts
    • fundamentals are what makes usdjpy (and audjpy to some extent) so predictable. Both FED and BoJ on normal days keep the pair in tight range, and on intervention day the pair moves sharply, making a spike. Breakout trades anyone?

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