Daily GBP/JPY analysis

good trade cio

Yen to Strengthen as Carry Trade Fades, Morgan Stanley Says
By Ye Xie
Feb. 12 (Bloomberg) -- The yen will strengthen against the euro as central banks raise interest rates because of global economic growth, according to Morgan Stanley.
The yen, trading near its record low of 158.99 per euro, will rebound to 150 per euro in May, according to a research report today. The currency has declined 6.8 percent against the euro and 4.8 percent versus the dollar in the past six months as investors borrow in Japan to finance purchases of higher yielding assets elsewhere, a transaction known as the carry trade.
The Japanese currency snapped a four-day slump today versus the euro after financial ministers and central bankers at the meeting of the Group of Seven nations warned against making ``one-way bets'' on the yen. Morgan Stanley also said expectations for Japanese growth and higher interest rates by the Bank of Japan have been lowered too much.
``We remain of the view that 2007 should see carry fade as a major'' foreign exchange market theme, Sophia Drossos, a currency strategist at Morgan Stanley in New York, wrote. As central banks in major developed countries continue raising borrowing costs, squeezing the market liquidity, it will ``prompt some reassessment about the cost-benefit of carry trades.''
Morgan Stanley is recommending that that investors initiate a short euro versus yen trade, or a bet that the common currency will decline. Drossos didn't immediately return a call seeking further comment.
``One-Way Bets''
Japan's currency rose to 158.06 per euro at 4 p.m. in New York, from 158.31 on Feb. 9. The yen traded at 121.93 per dollar from 121.71 on Feb. 9, after earlier dropping to an intra-day low of 122.10, close to the weakest in more than four years at 122.19 on Jan. 29.
The yen fell to the record low against the euro in Asian trading session today after officials at the G-7 meeting in Germany this weekend stopped short of criticizing the yen weakness. The G-7 group, includes the U.S., Japan, Germany, the U.K., France, Italy and Canada, met on Feb. 9-10.
European Central Bank President Jean-Claude Trichet said Feb. 10 that the G-7 group ``want the market to be aware of the risk in one-way bets, in particular on the foreign-exchange markets.''
The Bank of Japan last month kept its overnight lending rate at 0.25 percent, the lowest among industrialized nations. It compares with the Federal Reserve's 5.25 percent and 3.5 percent from the European Central Bank.
Investors should bet the yen to gain against the euro also because the economic growth in the 13-nation euro zone may slow down, according to Morgan Stanley.
To contact the reporter on this story: Ye Xie in New York at [email protected]
Last Updated: February 12, 2007 16:03 EST

∆∆ -- well, that's about as bearish of a yen article I've read so far. long gpy/jpy

Good article, thanks for posting

Yeah, the other thing to consider is that both GJ and EJ are pushing hard against a 10 year high, so if they are going to retrace/reverse this would be a good time to do it.

the yen is strong now

better dump that long for now

Anyone here trade only gpb/jpy?

GBR is weak today just look at fundamental! i think JPY is strongly yet, but i'm waiting for JPY Consumer Confidence performance release.

*NOTE: GBR gaining until Core CPI y/y release.
1.8 or <1.8 = fall GBR
>1.8 = rise GBR

If you have enough margin let it ride !! ok let it fall again some pips 50-100 dont think ( "I" dont think) it will fall deeper then 234.80 thats my SL.
it will come back dont panic. I got to positions open now both long if it goes down like mktrader says then take it again
I know its easy to say but like I saw these days thats gbp/jpy??! or..

happy pipping

I agree with you.
If it goes fall to 234.80 it's 50% retracement in D1 chart and time to buy a short/middle term

For Long Term
You must waiting until fall to between 61.8 to 78.6 retracement point is 230~231!!!

Just thought I'd post my plan for tonight:

On the downside, if 236.50 is broken - I'm short 2 lots with a TP of 236.00 and 235.50 respectively.

On the upside, if 237.50 is broken - I'm long 2 lots with a TP of 238 and 238.50 respectively.

Happy Pipping All!

seems to hit this 6.50 area about every 3-5 days pretty consistently this year

Will the GBP news take this to much lower levels before it goes up. 3 hrs to wait.

Bagged 40 pips approx in these fireworks. Seems can go down some more. but I will go long when my indicators show them. No more shorts for time being.

well, so much for my longs, (as I sit -234) maybe Ill have to be content just collecting interest for a year

ouch.

It's coming back to 236.25 before NY opens fwiw

me too (all together) -360 opend a new long 236.24 thats it and enough for
now time to wait , or hope ?

thanks for the -retracements- MKtrader

happy pipping