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USD/JPY Discussion

  • #19,181
  • Sep 29, 2010 4:04am Sep 29, 2010 4:04am
room to drop ..... ?

just another 50pips to land on blue and red trendline ....



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  • #19,182
  • Sep 29, 2010 4:12am Sep 29, 2010 4:12am
or will 83.50 support be a resting place to take a breather ...?



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  • #19,183
  • Sep 29, 2010 4:15am Sep 29, 2010 4:15am
Quoting realjumper
Or, boj and govt get together and make a plan to (say) make the interest rate 0.01%...that ought to deter most Yen buyers....and at the same time sell as much Yen as they can reasonably afford. Remember, they are not throwing away Yen after Yen....they are buying USD and Euro etc, so they are not going to just toss their Yen in the toilet. Now, there are many other things they can do I'm sure, I'm no economist, but by taking these measures, they save their companies and therefore the workers jobs....

Therein lies the problem, in essence they would be throwing away, giving away yen as traders and hedge funds would collude in an instant.... and trust me they can EASILY absorb 200 Billion Dollars.

Lets rationally assume the Japanese are willing to spend 50% of their reserves. (WOULD BE INSANE TO DO SO) ... recall they possess roughly 1 Trillion dollar in US denominated reserves.

Given the uncertainty of the time, I somehow find it hard to believe that the Japanese would be willing to shell out $300+ Billion to raise the Yen a few hundred pips.

Those funds could be used in a more efficient manner in tackling their "crisis".
  • #19,184
  • Sep 29, 2010 4:21am Sep 29, 2010 4:21am
if the triangle forms , then this could be a continous of the drop and the above drop may come true ....

or it might range about 83.50 ..

but then again , my amateurish analysis could be 100% wrong ....

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  • #19,185
  • Sep 29, 2010 4:23am Sep 29, 2010 4:23am
The question is how could they better use those funds to weaken the yen?

A tuff one for BOJ for sure. QE next week after they meet possible.

Why did they intervene in the first pace if they didn't think it would work either without follow up?
  • #19,186
  • Edited 4:30am Sep 29, 2010 4:25am | Edited 4:30am
Quoting Warwick
Therein lies the problem, in essence they would be throwing away, giving away yen as traders and hedge funds would collude in an instant.... and trust me they can EASILY absorb 200 Billion Dollars.

Lets rationally assume the Japanese are willing to spend 50% of their reserves. (WOULD BE INSANE TO DO SO) ... recall they possess roughly 1 Trillion dollar in US denominated reserves.

Given the uncertainty of the time, I somehow find it hard to believe that the Japanese would be willing to shell out $300+ Billion to raise the Yen a...
That's true up to a point. I don't imagine that they would have a 1 or 2 large Yen sales and hope to lower the Yen to (say) 90.00 in a couple of weeks. Selling the Yen would have to part of a plan, not the plan in itself. And the plan would need to be longer term if it's going to have a chance at sticking.

One of the main reasons that speculators keep buying the yen is due to Japans huge surplus. By spending some of the surplus (together with other actions) on intervention, and by tackling their huge debt as a priority, attention to the true state of the Japanese economy will be 'right in the face' of speculators. If that is successfull, then the Yen ought to establish a downtrend just as the Euro did when the PIIGS problems were brought right into the faces of the speculators. The EZ problems were just a flea on the camels back in comparison to to Japans problems, and look what happend to the Euro.

For sure they will have to give attention to the hedge funds, but they don't need to allow thosefunds to swamp them......which they will, as you say, if the intervention is not well thought out.
Doing what you like is Freedom. Liking what you do is Happiness.
  • #19,187
  • Sep 29, 2010 4:26am Sep 29, 2010 4:26am
Quoting TheArcher
if the triangle forms , then this could be a continous of the drop and the above drop may come true ....

or it might range about 83.50 ..

but then again , my amateurish analysis could be 100% wrong ....

...
yes it's on support now but channel is still down
after brake we go to 83,3 and next is ...
  • #19,188
  • Sep 29, 2010 4:29am Sep 29, 2010 4:29am
Quoting TheArcher
or will 83.50 support be a resting place to take a breather ...?
Who knows man? There isn't much earth shattering news due before the market close, so perhaps this pair will mess about between S1, where it is now, and S2. It's impossible to say....but my guess is for no lower than S2 today.
Doing what you like is Freedom. Liking what you do is Happiness.
  • #19,189
  • Sep 29, 2010 4:32am Sep 29, 2010 4:32am
Quoting Warwick
Therein lies the problem, in essence they would be throwing away, giving away yen as traders and hedge funds would collude in an instant.... and trust me they can EASILY absorb 200 Billion Dollars....
If the BOJ were attempting to prevent a bearish speculative attack on the value of their currency, then their firepower would obviously be limited, as they sell down their foreign currency reserves on the open market in a bid to stem the depreciation of the yen. In these situations, the markets quickly smell blood, as they calculate how quickly the reserves are dwindling down - remember Soros versus the Bank of England in 1992?

However, when a central bank is attempting to stem the appreciation of their currency, particularly when that economy is mired in persistent deflation, there is the option of simply printing additional currency (QE) and using this new money to purchase dollars, which actually increases the foreign exchange reserves and the supply of yen in circulation.

This type of intervention, using freshly printed money, can have an inflationary effect in the economy - at least in theory - if the BOJ elects not to issue yen denominated bonds to sterilise, or neutralise, the extra yen that is now in circulation.
  • #19,190
  • Sep 29, 2010 4:42am Sep 29, 2010 4:42am
Quoting Bootleger
Why do they have to artificially prop up an industry ? Let that industry reorganize and open their exports to others markets... this is simple and always worked like this.
An interesting point.

This is already happening, as more and more Japanese producers move their manufacturing operations overseas, in order to counter the effects of an uncompetitive yen.

Exporters will always moan at any appreciation in the currency, as it is in their interests to do so, but they can normally adapt and cut costs to a greater extent than they are prepared to publicly admit.
  • #19,191
  • Sep 29, 2010 4:47am Sep 29, 2010 4:47am
Quoting gammase1
An interesting point.

This is already happening, as more and more Japanese producers move their manufacturing operations overseas, in order to counter the effects of an uncompetitive yen.
The dowside to that is lost jobs domestically.....which never goes down well with voters. It happens, I know because it even happens here in little NZ, but the people have long memories and they don't appreciate companies being forced offshore, moreso when they go to 3rd world countries. The people lose jobs and the country loses taxes. Not a good look!
Doing what you like is Freedom. Liking what you do is Happiness.
  • #19,192
  • Sep 29, 2010 4:50am Sep 29, 2010 4:50am
Quoting realjumper
The dowside to that is lost jobs domestically.....which never goes down well with voters. It happens, I know because it even happens here in little NZ, but the people have long memories and they don't appreciate companies being forced offshore, moreso when they go to 3rd world countries. The people lose jobs and the country loses taxes. Not a good look!
Agreed. Voters simply do not understand the unstoppable globalisation of the economic functions. That is why exporters are moaning in public but in private are moving more operations overseas. However, the inconvenient fact remains that goods and services can be produced at a much cheaper price in developing countries, and all companies that are competing on the global stage must, in order to survive, operate with the lowest possible operational costs.

But the upside from any offshoring of production could be Japan becoming an economy that is not so skewed to the whims of global demand and manages to shift to a more consumer driven model, which could offset manufacturing jobs lost and any lower tax receipts. Who knows?
  • #19,193
  • Sep 29, 2010 4:54am Sep 29, 2010 4:54am
Quoting gammase1
Agreed.

Voters simply do not understand the unstoppable globalisation of the economic functions. That is why exporters are moaning in public but in private are moving more operations overseas.
Yeah, that's true. I guess the bottom line is pure old fashioned greed!!
Doing what you like is Freedom. Liking what you do is Happiness.
  • #19,194
  • Sep 29, 2010 4:57am Sep 29, 2010 4:57am
yes and more internally political impact, since more unemployment, more pressure to the politician. and more real action especially near the election day, so this "crisis" in japan is a complicated matter and it's all depend on the BOJ and the goverment, are they willing to cooperate to finish this wave or not. just make sure if you guys enter a position short or long in this pair make sure to calculate the risk management.
  • #19,195
  • Sep 29, 2010 4:59am Sep 29, 2010 4:59am
Quoting realjumper
Yeah, that's true. I guess the bottom line is pure old fashioned greed!!
Which is something that we speculative currency traders can well understand.
  • #19,196
  • Sep 29, 2010 5:00am Sep 29, 2010 5:00am
Quoting gammase1
Which is something that we speculative currency traders can well understand.
lol.....absolutely!
Doing what you like is Freedom. Liking what you do is Happiness.
  • #19,197
  • Sep 29, 2010 5:01am Sep 29, 2010 5:01am
Quoting yeri
yes and more internally political impact, since more unemployment, more pressure to the politician. and more real action especially near the election day, so this "crisis" in japan is a complicated matter and it's all depend on the BOJ and the goverment, are they willing to cooperate to finish this wave or not. just make sure if you guys enter a position short or long in this pair make sure to calculate the risk management.
How do you calculate the risk management in such an uncertain market, when price could gap 100-200 pips (or more) in seconds, causing huge slippage?
  • #19,198
  • Sep 29, 2010 5:09am Sep 29, 2010 5:09am
Quoting gammase1
How do you calculate the risk management in such an uncertain market, when price could gap 100-200 pips (or more) in seconds, causing huge slippage?

Make sure that 100-200 pips isn't gonna kill you by adjusting your lot sizes to the possible risks.
  • #19,199
  • Sep 29, 2010 5:12am Sep 29, 2010 5:12am
Quoting Catch-22
Make sure that 100-200 pips isn't gonna kill you by adjusting your lot sizes to the possible risks.
Agreed.

Is just the poster said to "calculate", which is impossible to do in such a market, where risk cannot be quantified, meaning one clearly has to take a cautious approach of low (or no) leverage when gambling with this pair. And the term "gambling" is carefully chosen.
  • #19,200
  • Edited 5:26am Sep 29, 2010 5:12am | Edited 5:26am
realjumper ,



thoroughly loved and enjoyed reading ur insightful , logical and passionate posts on the yen/japan issues ..

well .. what can i add : ....when things get tough .. self-preservation takes top priority ...

.
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