Waning demand for exports coupled with a strong JPY and rising commodity prices could be seen as the perfect storm that could bring down an already fragile (export-based) economy in Japan.
1. Is it going to happen, and more importantly to us currency speculators, what might be the implications of that scenario on JPY?
2. It is widely quoted that USD/JPY @ 106.50-60 is the break-even level for Japanese exporters. Now that we are nearing important support at 100.00, well below that level, and not really seeing any reason for the drop to stop, is there anything the Bank of Japan can/should do to avoid recession?
3. If/when the recession begins, will the market release its grip on JPY or will it just continue to buy it as relentlessly since the current insatiable demand for JPY is not really based on economic fundamentals anyway?
4. If the market continues to buy JPY despite a recession, how severe could things get? Imagine USD/JPY @ 80.00 or even lower. It is certainly within the realm of possibility. What might happen to Japan at that point?
1. Is it going to happen, and more importantly to us currency speculators, what might be the implications of that scenario on JPY?
2. It is widely quoted that USD/JPY @ 106.50-60 is the break-even level for Japanese exporters. Now that we are nearing important support at 100.00, well below that level, and not really seeing any reason for the drop to stop, is there anything the Bank of Japan can/should do to avoid recession?
3. If/when the recession begins, will the market release its grip on JPY or will it just continue to buy it as relentlessly since the current insatiable demand for JPY is not really based on economic fundamentals anyway?
4. If the market continues to buy JPY despite a recession, how severe could things get? Imagine USD/JPY @ 80.00 or even lower. It is certainly within the realm of possibility. What might happen to Japan at that point?