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USD/JPY Discussion

  • #28,661
  • Oct 28, 2011 2:52am Oct 28, 2011 2:52am
The price of insuring against dollar volatility against the yen declined slightly in Tokyo Friday, as dealers said the Japanese government appeared unlikely to intervene, at least for now. All bets are off if the greenback drops sharply, though, they said.

Hmmm... all bets are off if the greenback drops sharply. I've must have been living in a dreamworld as apparently the greenback hasn't dropped sharply. lol
  • #28,662
  • Oct 28, 2011 3:19am Oct 28, 2011 3:19am
A thought .. long vs short !

What it boils down to is risk to reward. As price is making new all time lows many think that bottom is near. However, the chart tells us that such is not necessarily so, especially when a pair is in such a steep downtrend.

Imo, playing this pair short is the safest way to go. Whats your risk when Boj does decide to intervene ? A spike that is sold within 48 hours, after which it drops even lower ? Going long is the risky way to go as last years have learned that bounces do occur, BUT they are being sold even quicker.

Eventhough I have serious doubts about whether intervention will take place (now there are even rumors that Boj will not intervene as long as 75 holds !), I would treat an intervention spike as an early Christmas gift.

If you want to play things on the long side, take the Eur/Jpy as the Usd in general has nowhere to go but lower ... look at US private debt ratio, economic decline, unemployment figures and now China looking to favor Euro instead of the ever declining worth of the dollar. Mind you Usdollar index was at 120 early 2001, nowadays its struggling to hold 75, a massive 37.5% drop ... talking about Usd inflation !!!!!!!

What are your thoughts about above mentioned ?
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  • #28,663
  • Oct 28, 2011 3:42am Oct 28, 2011 3:42am
Want to share a chart with you ... Usdollar index since 1983. The Usd/Jpy story is not only about Yen strenght ....
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  • #28,664
  • Oct 28, 2011 3:44am Oct 28, 2011 3:44am
according to me, yes in the last three days it made new lows, but everytime it bounced back. you can easily see on D1 chart. so it seems like the market is not sure where to go
  • #28,665
  • Oct 28, 2011 3:45am Oct 28, 2011 3:45am
Lets print 73.80 tonight To awaken BOJ this time
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If there was easy money lying around,no one would be forcing it into your
  • #28,666
  • Oct 28, 2011 3:54am Oct 28, 2011 3:54am
Quoting FXMindset
Lets print 73.80 tonight To awaken BOJ this time
Good morning FX !

Why would Boj be awake when price hits 73.80 ?

If indeed they would think that intervention would help, they would have intervened when price shot up towards 77.40 few days ago. Now that would have, imo, scared some big shorts ! But they choose not to, thus wasting another opportunity to turn things around.

Looks like these guys are like rabbits staring into big headlights, so scared that they freeze and get run over by a truck ;-)
  • #28,667
  • Oct 28, 2011 4:10am Oct 28, 2011 4:10am
If you are expecting to make money of BOJ interventions, you better don't enter the market now. I can assure you that BOJ wants strong yen, while lying that it wants weak one and let me explain you why in few steps:
1. When the yen is weak - it increases inflation (Japan import almost all resources from other countries). When the inflation is high, who will buy their bonds which offer super low interest rates? Their local investors, buy them because there is deflation, so the deflation + low interest is making them a bit more attractive.
Let's say inflation rise - to 1%, interest rate is 1% - this means 0% real yield on 10 year bonds. With deflation at 1% it's 1.1% real yield. BOJ and Japanese government desperately need people to buy their bonds as they are near a debt crisis.

2. BOJ does intervention only when the YEN strengths very much (5%+) for example, the last interventions were when USDJPY was -5%,-7%-10%...
They make these interventions because the shadow banking in Japan loses big when the USDJPY go highly negative and it poses risk of defaults in the Japanese system.
That's why they do intervene. So, don't expect interventions now when there is no high volatility. To get intervention we need -5% at least USDJPY loss .... If the USDJPY go down a little bit, Japan will do nothing as it doesn't pose risk to the shadow banking system of Japan, and at the same time it does increase the deflation making their bonds more attractive and also the imports of resources cheaper for companies.

Yes, I know the corporate sector gets hurt by the strong yen, but BOJ knows that if the world market players focus on their debt, Japan will either default or print like crazy making the yen worthless. That's why their bigger worry is not the yen, but their debt and they must keep deflation high and the yen strong. Strong yen also adds to the yield of bonds when denominated in other currencies making the bonds attractive also for foreigners. If the yen weakens for years, why would anyone buy their bonds yielding nothing ???

So, you must know that the situation there is complicated. BOJ will try to prevent a debt crisis. To do so it must keep the currency strong, but at the same time it will hurt exporters and pose risk to the shadow banking system. That's why intervention is not to weaken yen, but to cover losses of institutions when the USDJPY goes (-5%,-7%,-10% ....) as well as other currencies.

I see no reason for intervention now ... they just try to keep the downtrend slower, so the yen doesn't go balistic but strenght a little bit with the time. That's why they manipulate it by words and press releases from 90 to 75 USDJPY now ... they don't want to weaken the yen, just make it strength slower and gradual.

Regards,
Octacomm
  • #28,668
  • Oct 28, 2011 4:20am Oct 28, 2011 4:20am
Quoting SIgurs
Good morning FX !

Why would Boj be awake when price hits 73.80 ?

If indeed they would think that intervention would help, they would have intervened when price shot up towards 77.40 few days ago. Now that would have, imo, scared some big shorts ! But they choose not to, thus wasting another opportunity to turn things around.

Looks like these guys are like rabbits staring into big headlights, so scared that they freeze and get run over by a truck ;-)
Simple My Sweety SIgurs!It seems In this Level BOJ see no reason to intervene yet and they quite "Satisfied with the 75.50 defense so far",But if we hit in 73 and 74 area and still no action from they yet then am will leave this pairs forever consider Yen is Dead Currency now and the only thing to lift this currency Up is USD Become Super Stronger

Jap Authority mentioned that they cant do intervention like swiss is BS for me,this thing will keep getting worse and the naughty market will keep testing them,In other way am will closely watching how monthly chart progress so far for the next month
If there was easy money lying around,no one would be forcing it into your
  • #28,669
  • Oct 28, 2011 4:40am Oct 28, 2011 4:40am
Quoting octacomm
If you are expecting to make money of BOJ interventions, you better don't enter the market now. I can assure you that BOJ wants strong yen, while lying that it wants weak one and let me explain you why in few steps:
1. When the yen is weak - it increases inflation (Japan import almost all resources from other countries). When the inflation is high, who will buy their bonds which offer super low interest rates? Their local investors, buy them because there is deflation, so the deflation + low interest is making them a bit more attractive.
Let's say...
I dare to differ, imo utter nonsense ;-)

Authorities would love to see a more moderate Yen. Japans debt is not such a big problem as long as exports are good (trade surplusses remember).
  • #28,670
  • Oct 28, 2011 4:43am Oct 28, 2011 4:43am
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Quoting octacomm
if you are expecting to make money of boj interventions, you better don't enter the market now. I can assure you that boj wants strong yen, while lying that it wants weak one and let me explain you why in few steps:
1. When the yen is weak - it increases inflation (japan import almost all resources from other countries). When the inflation is high, who will buy their bonds which offer super low interest rates? Their local investors, buy them because there is deflation, so the deflation + low interest is making them a bit more attractive.
Let's say...
  • #28,671
  • Oct 28, 2011 4:44am Oct 28, 2011 4:44am
Quoting SIgurs
I dare to differ, imo utter nonsense ;-)

Authorities would love to see a more moderate Yen. Japans debt is not such a big problem as long as exports are good (trade surplusses remember).
I am agreed with SIgurs on this
If there was easy money lying around,no one would be forcing it into your
  • #28,672
  • Oct 28, 2011 4:58am Oct 28, 2011 4:58am
Quoting SIgurs
I dare to differ, imo utter nonsense ;-)

Authorities would love to see a more moderate Yen. Japans debt is not such a big problem as long as exports are good (trade surplusses remember).
The reason, imo, that they haven't intervened is due to:

- they prefer joint interventions - G7/20 is not willing to cooperate
- last interventions did not help - were sold within the next few days
- Usd/Jpy is a massive pair - billions are involved,, hard to turn ship
- Japanese 'group' mentality - they have a hard time riding their own course
- they tend to wait for other events to clear out - Eu debt crisis, US QE3 etc
only to find out that that doesn't help either ;-)

They want to see a weaker Yen, they want it badly, but they haven't got the faintest idea what to do to accomplish just that.

Let's face it, Boj/Mof is caught between a rock and a hard place !
  • #28,673
  • Oct 28, 2011 5:04am Oct 28, 2011 5:04am
Quoting FXMindset
Jap Authority mentioned that they cant do intervention like swiss is BS for me,this thing will keep getting worse and the naughty market will keep testing them,In other way am will closely watching how monthly chart progress so far for the next month
I believe that Japan could do a SNB style intervention.....and probably even better than SNB did.....after all, they have far more bullets at their disposal than SNB can afford. The fundamental difference is the SNB did not seek approval from anyone prior to the intervention, nor did they need to. Japan does not want to upset Uncle Sam, and as long as Uncle Sam is buying their exports, and as long as Europe is buying their exports, Japan will do very little to upset the apple cart.

If it were me or you (probably), I'd be inclined to intervene massively, and if Uncle Sam and/or Trichet doesn't like it, well, tough shit......Japan has to look after Japan first and foremost. But that's not the way their culture works......quite where the 'line in the sand' is for their pain threshold, who knows?
Doing what you like is Freedom. Liking what you do is Happiness.
  • #28,674
  • Oct 28, 2011 5:05am Oct 28, 2011 5:05am
Quoting SIgurs
The reason, imo, that they haven't intervened is due to:

- they prefer joint interventions - G7/20 is not willing to cooperate
- last interventions did not help - were sold within the next few days
- Usd/Jpy is a massive pair - billions are involved,, hard to turn ship
- Japanese 'group' mentality - they have a hard time riding their own course
- they tend to wait for other events to clear out - Eu debt crisis, US QE3 etc
only to find out that that doesn't help either ;-)

They want to see a weaker Yen, they want it badly, but they...
Sometimes you are quite annoying but its facts that you has contribute a lot in this thread and your analysis and post previously till now make senses more,I am very appreciate that,keep it up mate
If there was easy money lying around,no one would be forcing it into your
  • #28,675
  • Edited 5:21am Oct 28, 2011 5:10am | Edited 5:21am
Quoting realjumper
I believe that Japan could do a SNB style intervention.....and probably even better than SNB did.....after all, they have far more bullets at their disposal than SNB can afford. The fundamental difference is the SNB did not seek approval from anyone prior to the intervention, nor did they need to. Japan does not want to upset Uncle Sam, and as long as Uncle Sam is buying their exports, and as long as Europe is buying their exports, Japan will do very little to upset the apple cart.

If it were me or you (probably), I'd be inclined to intervene...
Hello RealJumper,

I am believe even how stronger Jap Products is people would keep buying but the problem is how much and how long in this Global competition Especially facing China cheap products?

Personally I still dont get it why US or Euro dont like it while the cheap yen will provide US/Euro Buying much power with Jap Products
If there was easy money lying around,no one would be forcing it into your
  • #28,676
  • Oct 28, 2011 5:20am Oct 28, 2011 5:20am
Quoting FXMindset
Hello RealJumper,

I am believe even how stronger Jap Products is people would keep buying but the problem is how much and how long in this Global competition Especially facing China cheap products?

Personally I still dont get it why US or Euro dont like it while the cheap yen will provide US/Euro Buying power much with Jap Products
Well Japan is losing market share to Korea and China....even as we speak. Those lost markets will be unlikely to return either. Given the crap state of the Japanese economy, losing market share will be painful and will add to the stumbling economic recovery.

I think USA is more concerned with keeping the Greenback value down, as this aids their exports, than it is worrying about expensive Japanese imports. They too are large buyers of (cheaper) Korean and Chinese products. Japan is also a large supplier Boeing parts (for instance)......I think they make the wings (and more) for Boeing's Dreamliner, not to mention electronic components so it is unlikely that Japan is going to upset Uncle Sam.

There WILL be a line in the sand for Japan, but quite what they do when they get there is anyones guess.
Doing what you like is Freedom. Liking what you do is Happiness.
  • #28,677
  • Oct 28, 2011 5:21am Oct 28, 2011 5:21am
Quoting FXMindset
Lets print 73.80 tonight To awaken BOJ this time
I think if prints 73.80 they will intervene but is it possible to reach 73.80 tonight.
  • #28,678
  • Oct 28, 2011 5:23am Oct 28, 2011 5:23am
Quoting FXMindset
Personally I still dont get it why US or Euro dont like it while the cheap yen will provide US/Euro Buying power much with Jap Products
If I may intervene ;-)

The strong Yen on the other hand makes Euro an US products way cheaper for Japanese ... BMW, Mercedes, Volvo, Louis Vuitton, etc etc..... thus boosting Us and Euro exports to Japan.

It's, as always, a two edged sword.
  • #28,679
  • Oct 28, 2011 5:24am Oct 28, 2011 5:24am
Quoting realjumper
Well Japan is losing market share to Korea and China....even as we speak. Those lost markets will be unlikely to return either. Given the crap state of the Japanese economy, losing market share will be painful and will add to the stumbling economic recovery.

I think USA is more concerned with keeping the Greenback value down, as this aids their exports, than it is worrying about expensive Japanese imports. They too are large buyers of (cheaper) Korean and Chinese products. Japan is also a large supplier Boeing parts (for instance)......I think...
Good post !
  • #28,680
  • Oct 28, 2011 5:28am Oct 28, 2011 5:28am
Quoting realjumper
Well Japan is losing market share to Korea and China....even as we speak. Those lost markets will be unlikely to return either. Given the crap state of the Japanese economy, losing market share will be painful and will add to the stumbling economic recovery.

I think USA is more concerned with keeping the Greenback value down, as this aids their exports, than it is worrying about expensive Japanese imports. They too are large buyers of (cheaper) Korean and Chinese products. Japan is also a large supplier Boeing parts (for instance)......I think...
"Line Sand"...Sorry,I dont quite understand about that part? You mean secret weapon mate or?

Talk about Korean am believe they are already surpass Japanese products as we can see in many ways and places,slowly or even sooner the next asia high technology might be Korea,No Japan anymore
If there was easy money lying around,no one would be forcing it into your
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