Why is Yen strengthening so fast? | Forex Factory

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Why is Yen strengthening so fast?

  • #1
  • First Post: Sep 20, 2007 10:13am Sep 20, 2007 10:13am
I wonder why is USD so bearish today? Its like USD/Yen carry trade is going down but the DOW is not going down.

Anything going on?
  • #2
  • Sep 20, 2007 10:17am Sep 20, 2007 10:17am
Quoting Mr_Trader
I wonder why is USD so bearish today? Its like USD/Yen carry trade is going down but the DOW is not going down.

Anything going on?
Fed's Bernanke, US Tsy's Paulson on the congressional hearing adressing the housing crisis.
  • #3
  • Sep 20, 2007 10:20am Sep 20, 2007 10:20am
Quoting cesarnc
Fed's Bernanke, US Tsy's Paulson on the congressional hearing adressing the housing crisis.
I see. so carry traders think that US is in a bad shape. But equities doesn't -- since dow is not falling. A bit wierd....
  • #4
  • Sep 20, 2007 10:21am Sep 20, 2007 10:21am
I would assume that with the Dow opening down, money is moving from USD/JPY to other crosses. I haven't checkes the other JPY crosses however....But USD/JPY was a sell from the time it crossed the mnor rising support line drawn from the Sept 10 lows (on the hourlies).
  • #5
  • Sep 20, 2007 10:25am Sep 20, 2007 10:25am
Quoting Mr_Trader
I see. so carry traders think that US is in a bad shape. But equities doesn't -- since dow is not falling. A bit wierd....
No. It was the dollar that was dumped today since Frankfurt open. The market was looking for signals that Fed is bound to cut rates some more shortly.

Although I didn't find those "signals" during the hearing, the market seemed to have heard something LOL...

Bernanke and Paulson are to take questions from the committee shortly.
  • #6
  • Sep 20, 2007 10:29am Sep 20, 2007 10:29am
Quoting cesarnc
No. It was the dollar that was dumped today since Frankfurt open. The market was looking for signals that Fed is bound to cut rates some more shortly.

Although I didn't find those "signals" during the hearing, the market seemed to have heard something LOL...

Bernanke and Paulson are to take questions from the committee shortly.
Ah i see.. but if they are cutting rates... USD/Yen should be happy of the carry trades ... and Dow should be happy too?
  • #7
  • Sep 20, 2007 10:31am Sep 20, 2007 10:31am
The Unemployment numbers dropped this am, which tends to put pressure on raising rates.
  • #8
  • Sep 20, 2007 10:31am Sep 20, 2007 10:31am
Quoting Mr_Trader
Ah i see.. but if they are cutting rates... USD/Yen should be happy of the carry trades ... and Dow should be happy too?
Dow is awfully quite today trading flat. But on the currencies, dollar is hot potato today.
  • #9
  • Sep 20, 2007 10:57am Sep 20, 2007 10:57am
Take a look at LIBOR-

JAPAN

TOM/NEXT 0.63 - 0.68

7 DAY 0.90 - 1.00

1 MTH 0.87 - 0.92

3 MTHS 0.95 - 1.00

6 MTHS 1.04 - 1.09

12 MTHS 1.13 - 1.18

In the meantime as Japanese rates are rising-Dollar rates are falling after 3 months. That means the British Bankers Association sees rates going Up in Japan and Down in the US.

Every hedge fund, investment bank and multi national has to adjust their portfolios accordingly to hedge the predicted dollar depreciation.
  • #10
  • Sep 20, 2007 11:07am Sep 20, 2007 11:07am
Getting an up-move spike however after the Philly Fed results....so I'm out. Note however that it did cross the 1.38 retracement level and touched 1.5 Curious how that stuff works
  • #11
  • Sep 20, 2007 11:14am Sep 20, 2007 11:14am
I think this one weighs adds to the dollar dumping, too...

"there have been reports that the Saudis would no longer peg their currency to the greenback. The dollar again fell this morning to a new low against the Euro to 1.4065."

http://www.forexfactory.com/news.php?do=news&id=47909
  • #12
  • Sep 20, 2007 11:18am Sep 20, 2007 11:18am
Quoting cesarnc
I think this one weighs adds to the dollar dumping, too...

"there have been reports that the Saudis would no longer peg their currency to the greenback. The dollar again fell this morning to a new low against the Euro to 1.4065."

http://www.forexfactory.com/news.php?do=news&id=47909
The peg has been reaffirmed by the Saudis.

Saudi Plans to Keep Riyal Pegged to the Dollar, Adviser Says
http://www.bloomberg.com/apps/news?p...currency_rates
  • #13
  • Sep 20, 2007 11:21am Sep 20, 2007 11:21am
Quoting cesarnc
Fed's Bernanke, US Tsy's Paulson on the congressional hearing adressing the housing crisis.
Don't forget that Japanese manufacturing numbers came in ++ :
Preview to the all-important tankan survey... not surprised, thats the fundie in me talking... lol..


the technical me would say.. the charts said that.. big wedge was forming yesterday.. bearish signal.
  • #14
  • Sep 20, 2007 11:37am Sep 20, 2007 11:37am
Quoting Trader KGB
The peg has been reaffirmed by the Saudis.

Saudi Plans to Keep Riyal Pegged to the Dollar, Adviser Says
http://www.bloomberg.com/apps/news?p...currency_rates
See? It's a good thing that the Bushie's are such close friends of the Bin Laden family...
  • #15
  • Sep 20, 2007 11:38am Sep 20, 2007 11:38am
Quoting NewstraderFX
See? It's a good thing that the Bushie's are such close friends of the Bin Laden family...
:
  • #16
  • Sep 20, 2007 11:38am Sep 20, 2007 11:38am
Quoting NewstraderFX
See? It's a good thing that the Bushie's are such close friends of the Bin Laden family...
  • #17
  • Sep 20, 2007 11:42am Sep 20, 2007 11:42am
Quoting leachimeewg
For every pip that dropped for USD/Yen is only one pip up for EUR/USD. I guess yen is exceptionally strong.

Though I think that corporate profits in Japan will not be good in the months to come with the stronger yen.
  • #18
  • Last Post: Sep 20, 2007 11:48am Sep 20, 2007 11:48am
Quoting Mr_Trader
For every pip that dropped for USD/Yen is only one pip up for EUR/USD. I guess yen is exceptionally strong.

Though I think that corporate profits in Japan will not be good in the months to come with the stronger yen.
Liquidity bubble is building up and asian goverments will want to ensure that they don't have the same issues as US. With U.S signaling rate cuts in the future, its not difficult to see why UJ would fall. Carry trading has to stop at some point if not, at least reduce substantially, hedge funds, instituitional investors or the everyday japanese housewives are carry trading the Yen.

If we see Aussie cut rates or signal to cut rates... then the AUDUSD / AUDJPY would also see tremendous unwinding.

though corporate profits might not be that strong, land prices have continued to appreciate.. inflation is slowly returning to the country.
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