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USD/JPY Discussion

  • #59,801
  • Apr 14, 2016 2:53am Apr 14, 2016 2:53am
Finally nice fast PT from both trades, here we go !

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  • #59,802
  • Apr 14, 2016 4:20am Apr 14, 2016 4:20am
Wow, very nice move here. The market is quite accurately testing the support now. But I would like to rather wait for a resistance and open short trades then. Do others agree with my outlook?
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  • #59,803
  • Apr 14, 2016 4:59am Apr 14, 2016 4:59am
So the bounce from the support at M15 was very accurate. We are close to the red support at M5 above the actual price that can become resistance. Maybe it could be a good idea to load some shorts here.

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  • #59,804
  • Apr 14, 2016 7:43am Apr 14, 2016 7:43am
Bottom formation just confirmed breakout above 109.25, now indicates a move to as high as 109.50 based off pattern
  • #59,805
  • Apr 14, 2016 8:15am Apr 14, 2016 8:15am
Quoting Exodus
{quote} I think he said it correctly, Yen depreciates then UJ moves up.
Yes I didn't look at the numbers mentioned just the word south - which obvious is not up.
  • #59,806
  • Apr 14, 2016 9:30am Apr 14, 2016 9:30am
Quoting SunTrader
{quote} Yes I didn't look at the numbers mentioned just the word south - which obvious is not up.

http://www.forexfactory.com/showthre...30#post8873630

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  • #59,807
  • Apr 14, 2016 11:40am Apr 14, 2016 11:40am
So? What does that have to do with my post.
  • #59,808
  • Apr 14, 2016 8:52pm Apr 14, 2016 8:52pm
COT report is a trap as always, cuz it's only updated till Tuesday, when published on Friday, plenty of time to setup the market....lol
  • #59,809
  • Apr 14, 2016 10:15pm Apr 14, 2016 10:15pm
Jpy weakens. Next resistance is the 21 EMA. See where it goes after that.
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I hold a 8-5 job. I trade 90% daily, 10% H4; 90% technical, 10% fundamental
  • #59,810
  • Apr 14, 2016 10:19pm Apr 14, 2016 10:19pm
The only level we need to watch right now..
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  • #59,811
  • Apr 15, 2016 6:50pm Apr 15, 2016 6:50pm
Downward pressure remains, next immediate support level can be found around 118.50 zone, break below would lead to further decline.
  • #59,812
  • Apr 15, 2016 6:58pm Apr 15, 2016 6:58pm
Quoting csc2009
Downward pressure remains, next immediate support level can be found around 118.50 zone, break below would lead to further decline.
if you are above 118.50, short your whole account... you are probably about 1000 pips too high though
  • #59,813
  • Apr 18, 2016 12:45am Apr 18, 2016 12:45am
Quoting GDR3k
Couple of scalps lined up off long wicks. {image}

what do you think the target for EUR JPY it hits 121 707 which is the lowest since 3 years
  • #59,814
  • Apr 18, 2016 1:01am Apr 18, 2016 1:01am
BOJ meeting coming up on April 28th and some kind of action/intervention is now widely expected. Yen long positions at an historical extreme so a short covering in UJ is very likely to happen over the next few days
  • #59,815
  • Apr 18, 2016 2:34am Apr 18, 2016 2:34am
Quoting ez0770
BOJ meeting coming up on April 28th and some kind of action/intervention is now widely expected. Yen long positions at an historical extreme so a short covering in UJ is very likely to happen over the next few days
From a look at tradingeconomics.com I saw that Japan's Balance of Trade is positive now, which is a good boost to the economy and probably pushing JPY stronger against all counterparts. US economy could have been peaked. They don't necessarily have to go into worse conditions but they might not go much better.

My view is that USDJPY will continue to go down until BoJ decides that it's time to weaken the currency.

What kind of intervention do you expect from BoJ?
  • #59,816
  • Apr 18, 2016 2:49am Apr 18, 2016 2:49am
Quoting fonx
From .... I saw that Japan's Balance of Trade is positive now, which is a good boost to the economy and probably pushing JPY stronger against all counterparts. ...
+ve balance of trade will strengthen Yen, but it does not necessarily imply anything about the economy.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #59,817
  • Apr 18, 2016 3:02am Apr 18, 2016 3:02am
Quoting fonx
{quote} From a look at tradingeconomics.com I saw that Japan's Balance of Trade is positive now, which is a good boost to the economy and probably pushing JPY stronger against all counterparts. US economy could have been peaked. They don't necessarily have to go into worse conditions but they might not go much better. My view is that USDJPY will continue to go down until BoJ decides that it's time to weaken the currency. What kind of intervention do you expect from BoJ?
I expect more QE, perhaps in the form of buying ETFs which could boost equities. A big factor of yen strength this year has been foreign investors pulling out of Japanese equity markets and unwinding related currency hedges. If the BOJ manages to make equities appealing again (by pumping money into the market) the flows might reverse putting downward pressure on the Yen.

Direct intervention in the currency market is now globally frowned upon, as we're being told, and possibly tolerated only in highly volatile markets so unlikely to happen. A positive trade balance reinforces the case against direct FX intervention, whereas my first scenario above is very likely imo...

In any case, whether they will act or not, given that everyone and their dog seems to be long Yen at the moment by looking at the latest CFTC data, it is very likely that in the short term, ahead of the meeting, we will see some position squaring, save of course other major events like a natural disaster or global equity markets collapse
  • #59,818
  • Apr 18, 2016 3:49am Apr 18, 2016 3:49am
Thanks for the explanation. I'm a bit inexperienced with FA but I want to learn what drives the markets in the long term (not interested in the intraday ups and downs).

I quite don't understand the reaction on the actions you exposed in this paragraph:

Quoting ez0770
I expect more QE, perhaps in the form of buying ETFs which could boost equities. A big factor of yen strength this year has been foreign investors pulling out of Japanese equity markets and unwinding related currency hedges. If the BOJ manages to make equities appealing again (by pumping money into the market) the flows might reverse putting downward pressure on the Yen.
Action: Foreigh investors pulling out of Japanese equities
Reaction: you said yen strength, but shouldn't it be weakness as foreign investors unwind yen positions into their own currencies? If so, the yen strength we are seeing shouldn't come from other source like a positive Balance of Trade?

Action: (this is a potential future scenario) BoJ makes equities more appealing (buying them maybe and creating upward momentum)
Reaction: you said yen downward pressure, but shouldn't it be strength as investors come again from abroad buying yens?

Thanks in advance and regards.
  • #59,819
  • Apr 18, 2016 4:37am Apr 18, 2016 4:37am
Quoting fonx
Thanks for the explanation. I'm a bit inexperienced with FA but I want to learn what drives the markets in the long term (not interested in the intraday ups and downs). I quite don't understand the reaction on the actions you exposed in this paragraph: {quote} Action: Foreigh investors pulling out of Japanese equities Reaction: you said yen strength, but shouldn't it be weakness as foreign investors unwind yen positions into their own currencies? If so, the yen strength we are seeing shouldn't come from other source like a positive Balance of Trade?...
Foreign investors in Japanese equities hedge the currency risk by selling Yen. If you are a non Japanese investor buying stock in a Japanese company, you are interested in realizing capital gain (and dividend income) from that stock but in most cases do not seek to be exposed to currency (yen) fluctuations because if the stock goes up say 10% but the yen weakens by the same amount or more against your base currency, you made nothing or even lost money. So you buy an option to sell yen in the future at a predetermined level that you are comfortable with, or sell a forward contract or sell spot. The net result is always that you Sell the yen.

Now when you unwind your long equity position (sell your stocks) you also unwind your currency hedge which means you are now buying Yen. It is estimated that in 2016 foreign investors have sold their holdings of Japanese stocks for an amount in the neighbourhood of USD 290 billion, which means that they have unwound up to USD 290 billion of currency hedges (i.e. they have bought massive amounts of Yen).

I hope this is clear enough and answers both of your questions.
  • #59,820
  • Apr 18, 2016 5:10am Apr 18, 2016 5:10am
Quoting ez0770
{quote} Foreign investors in Japanese equities hedge the currency risk by selling Yen. If you are a non Japanese investor buying stock in a Japanese company, you are interested in realizing capital gain (and dividend income) from that stock but in most cases do not seek to be exposed to currency (yen) fluctuations because if the stock goes up say 10% but the yen weakens by the same amount or more against your base currency, you made nothing or even lost money. So you buy an option to sell yen in the future at a predetermined level that you are comfortable...
It is a brilliant explanation. I never thought about this. I have to bookmark this one into my notes. Thank you very much.

I still have a question about the process, I feel I'm missing something. Let's say I'm European and I buy the stock of a Japanese company. I thought I'm buying Yen vs EUR in the process as I have to convert my currency. In that case I'm long in the stock and I'm long in Yen (vs EUR). If I hedge my equity position (short yen) shouldn't my yen long and my yen short offset each other and therefore the exchange remain at the initial level? If that is the case the exchange rate shouldn't be affected when foreign people buy Japanese equity and when they sell it, provided that most of the foreign investors hedge positions (which makes totally sense after your explanation).

I appretiate very much your explanations. They are very important pieces in this big puzzle.
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