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Daily GBP/JPY analysis

  • #6,421
  • Jun 20, 2007 11:55am Jun 20, 2007 11:55am
I'm seeing these "end of the yen carry trade" doom articles for several years and still making s#$%loads shorting the yen against almost anything else ever since.
I have no doubt it will unwind (perhaps even sometime soon) and it will be violent too, nothing like the occasional 1000-2000 pips we've seen in the past few years. That will be the time I'll be buying yens. But it might not happen for months or years, so until then I'm long GBPJPY and what I've learned trading this beast, is that it almost always runs further up than anyone expects so I'm enjoying the ride so far...
  • #6,422
  • Jun 20, 2007 12:28pm Jun 20, 2007 12:28pm
I'm sorry, I just don't see it.

The only way we are going to see the true end of the carry trade is if the interest rate differential between Yen and other major currencies narrows markedly from what we have today.

As of this time there is absolutely NO evidence to suggest that this is going to happen soon, or even in the forseeable future.

Even the chinese market crash only set back carries by around a month.

The Bank of Japan states quite clearly that it is going to increase rates only gradually and then only if the economic situation is deemed inflationary enough.

For that to happen is going to require a reasonable amount of time and even when it does, the BOJ has committed itself only to incremental rises.

While all this is going on we have obvious inflationary pressures in both EUR and GBP, with hawkish stances being taken by both and the near promise of further rate hikes in the coming months.

This will further widen the gap between Yen and its currency rivals, and as the BOJ says it is only to raise rates incrementally, it will only take longer for them to restore even the current parity.

The end of the carry trade will probably occur at some point in time, but that time is certainly not this day.
quote of the day: . It's like deja-vu all over again
  • #6,423
  • Jun 20, 2007 12:43pm Jun 20, 2007 12:43pm
carry trades will indeed take some time to end but there will be many corrections and retracements in between. It just cannot keep carrying on to double the levels that we are now, right? so it would indeed be a slow painful process
  • #6,424
  • Jun 20, 2007 12:50pm Jun 20, 2007 12:50pm
absolutely, but I can't see it being 1000 pips or more, just your normal run of the mill retracement followed by further upward momentum.

I hope I'm wrong, it would be a fantastic skiing trip and a very tasty bottom to fish.

Without any significant interest rate change, however, the next mountain GJ builds inevitably seems to be bigger than the last
quote of the day: . It's like deja-vu all over again
  • #6,425
  • Jun 20, 2007 2:47pm Jun 20, 2007 2:47pm
if EJ closes below 165.70 in hourlies, than i will expect the GJ pair to retrace to 245.50...
so watch out EJ closely.
  • #6,426
  • Jun 20, 2007 3:23pm Jun 20, 2007 3:23pm
Quoting nathbear
I'm out of my longs and am being awfully careful with the carries right now. I could be wrong again, but the collapse of a major hedge fun and subsequent bargain sell-off of their assets (including securities) sets off major warning bells for the liquidity market and the carries by further association.
link ? what hedge fund are you talking about ?
  • #6,427
  • Jun 20, 2007 3:39pm Jun 20, 2007 3:39pm
Quoting melpheos
link ? what hedge fund are you talking about ?
June 20 (Bloomberg) -- Bear Stearns Cos.'s attempt to rescue its money-losing hedge funds may falter after creditor Merrill Lynch & Co. decided to seize and sell $800 million of bonds held as collateral for loans to the funds.
Merrill Lynch plans to offer the securities to investors later today, according to people with knowledge of the offering. JPMorgan Chase & Co. canceled its plans to sell about $400 million of bonds today while it negotiates a potential bailout with New York-based Bear Stearns, one person said.
The 10-month-old High-Grade Structured Credit Strategies Enhanced Leverage Fund, run by Bear Stearns senior managing director Ralph Cioffi, has lost about 20 percent this year. The fund and a sister fund called the High-Grade Structured Credit Strategies Fund, which hadn't borrowed as much and was down less, both have faced pressure from creditors. They specialized in mortgage bonds and so-called collateralized debt obligations backed by home-loan bonds and other assets.

think this is the one he means
  • #6,428
  • Jun 20, 2007 3:59pm Jun 20, 2007 3:59pm
Untill the European session, 246.15 246.60 swing trade might take place.
  • #6,429
  • Jun 20, 2007 4:15pm Jun 20, 2007 4:15pm
Quoting Alfa159
if EJ closes below 165.70 in hourlies, than i will expect the GJ pair to retrace to 245.50...
so watch out EJ closely.
It is downtrend, now. Is it just technical reason, retracement, or is it fundamental reason?(I don't think there is any news)
  • #6,430
  • Jun 20, 2007 4:22pm Jun 20, 2007 4:22pm
there arent any major news tomorrow.. So I believe for now we can call it a retracement.
  • #6,431
  • Jun 20, 2007 4:23pm Jun 20, 2007 4:23pm
Quoting Alfa159
there arent any major news tomorrow.. So I believe for now we can call it a retracement.
I think so too probably 100 or 150 pips
  • #6,432
  • Jun 20, 2007 4:35pm Jun 20, 2007 4:35pm
Quoting trader8686
It is downtrend, now. Is it just technical reason, retracement, or is it fundamental reason?(I don't think there is any news)
Look up DJIA and risk aversion. Those would be the fundies behind it.

To sum it up. Players are profit taking while it's hot. And looking to do the same thing we all are. Reset on a dip.

So yes it is a retrace
  • #6,433
  • Jun 20, 2007 4:54pm Jun 20, 2007 4:54pm
Does anyone know when it is ideal to long again?
  • #6,434
  • Jun 20, 2007 4:59pm Jun 20, 2007 4:59pm
it might hold at 246.09 resistance.. but my bias is the pair will go down to 245.50 and than go long again... 245.50 was a major resistance and now it will be a major support.
  • #6,435
  • Jun 20, 2007 5:03pm Jun 20, 2007 5:03pm
Interesting...im hoping all the profit takers aren't exiting too fast on this downtrend (245.07) and this pair will shoot back up again in no time before reaching 244.50
  • #6,436
  • Jun 20, 2007 5:04pm Jun 20, 2007 5:04pm
the pair just closed below 246.09... So I am expecting a test of 245.50 now
but still better observe the movement in the asian session before attempting anything
  • #6,437
  • Jun 20, 2007 5:24pm Jun 20, 2007 5:24pm
Quoting Alfa159
the pair just closed below 246.09... So I am expecting a test of 245.50 now
but still better observe the movement in the asian session before attempting anything
Of what significance was that levle might I ask? (meaning 246.09)

Added to that there are 2 small news announcements coming out soon.

IMO should the trade balance come in higher then forecast, then the house wives might see it as something to off set the slumps in foreign markets. And then the risk aversion selling that has been taking place will be enough of a dip to send them back into shopping spree buying anything they can.

Then there this guy

He can turn a shopping spree in to a full blown riot should they think he winks at them during his speech.

I am still long and have already bought more on EJ and GJ lets see how it goes
  • #6,438
  • Jun 20, 2007 5:31pm Jun 20, 2007 5:31pm
245.50 indeed a key level. Don't forget Fukui on the wires at 2:30am EST
  • #6,439
  • Jun 20, 2007 5:45pm Jun 20, 2007 5:45pm
Quoting Sniper
Of what significance was that levle might I ask? (meaning 246.09)

Added to that there are 2 small news announcements coming out soon.

IMO should the trade balance come in higher then forecast, then the house wives might see it as something to off set the slumps in foreign markets. And then the risk aversion selling that has been taking place will be enough of a dip to send them back into shopping spree buying anything they can.

Then there this guy

He can turn a shopping spree in to a full blown riot should they think he winks at them during his speech.

I am still long and have already bought more on EJ and GJ lets see how it goes
here... a minor resistance/support... but worked for today while going up to 246.60... Though depending on how you put your supports and resistances, 246.00 will also make sense... So perhaps wait for 246.00 to be broken in order to fully say a retracement to 245.50
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  • #6,440
  • Jun 20, 2007 5:48pm Jun 20, 2007 5:48pm
Quoting cesarnc
245.50 indeed a key level. Don't forget Fukui on the wires at 2:30am EST
Fukui's speech will be important.. But not too much... Also I dont believe the Trade Balance which will come out soon have a great impact... So I am aiming for some more southern action... But Uptrend is still on. As I said before, just a small retracement.
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