US Dollar versus Japanese Yen | Forex Factory

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US Dollar versus Japanese Yen

  • #1
  • First Post: Dec 12, 2012 8:13pm Dec 12, 2012 8:13pm
I only trade EUR/USD or USD/CHF so I have to ask this question ( and I hope this is the best forum for it.)

Why did the Japanese yen weaken when the US dollar was weakened on 12/12/2012? When I see anything that will weaken the US Dollar I know that USD/CHF will go down, which is what happened yesterday. But USD/JPY should also go down, too, but it goes up a lot. The Dollar Index went down on the news of QE4, so I don't understand why USD/JPY did not also go down also. And yes I know that the DX is weighted against a bunch of currencies.

Is there some variable I am missing?
  • #2
  • Dec 12, 2012 10:48pm Dec 12, 2012 10:48pm
Quoting BillSuits
I only trade EUR/USD or USD/CHF so I have to ask this question ( and I hope this is the best forum for it.)

Why did the Japanese yen weaken when the US dollar was weakened on 12/12/2012? When I see anything that will weaken the US Dollar I know that USD/CHF will go down, which is what happened yesterday. But USD/JPY should also go down, too, but it goes up a lot. The Dollar Index went down on the news of QE4, so I don't understand why USD/JPY did not also go down also. And yes I know that the DX is weighted against a bunch of currencies.

Is...
Hello. BillSuits.
http://www.efxnews.com/story/16327/j...-be-vindicated
  • #3
  • Dec 13, 2012 4:05am Dec 13, 2012 4:05am
Quoting BillSuits
I only trade EUR/USD or USD/CHF so I have to ask this question ( and I hope this is the best forum for it.)

Why did the Japanese yen weaken when the US dollar was weakened on 12/12/2012? When I see anything that will weaken the US Dollar I know that USD/CHF will go down, which is what happened yesterday. But USD/JPY should also go down, too, but it goes up a lot. The Dollar Index went down on the news of QE4, so I don't understand why USD/JPY did not also go down also. And yes I know that the DX is weighted against a bunch of currencies.

Is...

A currency pair consists of 2 currencies. How the currency pair moves is dependent on the strength of the 2 currencies relative to each other.

The point about USDCHF going up while USDJPY moving down at the same time simply means JPY was even weaker than the USD. You cannot be expecting USDJPY to move down just because USDCHF is doing so.
  • #4
  • Dec 13, 2012 6:59am Dec 13, 2012 6:59am
Quoting Frankxyz
A currency pair consists of 2 currencies. How the currency pair moves is dependent on the strength of the 2 currencies relative to each other.

The point about USDCHF going up while USDJPY moving down at the same time simply means JPY was even weaker than the USD. You cannot be expecting USDJPY to move down just because USDCHF is doing so.
I understand that it is a relationship between two currencies. I trade EUR/USD and USD/CHF so I got that part clear.

I don't trade any JPY pairs because they are not correlated to the others. I just did not understand why they are not correlated.

Thanks for the link Entheos. It helped explain some thing. I also was unaware of the elections coming, as I don't trade these pairs or follow JPY news.
  • #5
  • Dec 13, 2012 8:17am Dec 13, 2012 8:17am
It is because Bank of Japan (BOJ) interference to stabilize JPY currency VS USD currency. If USD up then BOJ will make JPY up too,vice versa, Finally pair USDJPY will be stable , not too volatile.

This case is like EUR Currency VS CHF Currency.
  • #6
  • Dec 28, 2012 10:44am Dec 28, 2012 10:44am
The JPY is also seen as a safe haven currency. So when there is weakness in the US economy/news which may suggest this, money will leave high yielding commodity currency's and pile into lower yielding safe haven such as the JPY. Took me a while and alot of cash to realise this when the Yen crosses would suddenly melt down for no reason whatsoever!
  • #7
  • Dec 28, 2012 5:21pm Dec 28, 2012 5:21pm
Japan's economy is very much export driven, and the USA is one of it's largest trading partners. When USD tanks it becomes more expensive for american firms to import from Japan, making japanese imports less appealing which in turn drives down the value of JPY.

How many reasons would you like?
si hoc legere scis nimium eruditionis habes
  • #8
  • Last Post: Dec 29, 2012 12:22am Dec 29, 2012 12:22am
BOJ steps in often to bulk up the currency, and on cross relation - come on, google this and you will see why the currency correlation cannot really be simplified as "If A goes up, so should B"
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