Menu
Sister Sites

Options

Bookmark Thread

First Page First Unread Last Page Last Post

Print Thread

Similar Threads

USD/JPY Discussion 7 replies

NZD/JPY Discussion 12 replies

long eur/jpy, gbp/jpy, usd/jpy 11 replies

EUR/USD Bollinger Band Discussion 3 replies

Suidster's GBP/JPY Discussion 19 replies

Attachments: USD/JPY Discussion
Exit Attachments

USD/JPY Discussion

Quoting fonx
{quote} 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...
Very good question. There can be different explanations:

1) As a foreign investor you buy currency-hedged Japanese stocks from another foreign investor who held the stocks unhedged (i.e. long yen). The net result would be +ve for stocks and -ve for the yen.

2) As a foreign investor you buy currency hedged Japanese equities from a Japanese investor who uses the proceeds of the sale to purchase foreign assets (stocks, bonds etc) unhedged. This has often been the case over the past couple of years. The net impact would be as above.

3) As a foreign holder of Japanese stocks, you hedge your currency exposure dynamically as the market moves up or down: as it goes up, the corresponding amount of yen that you hold in stock also goes up, so you need to sell more yen to be hedged. Reverse the flows when the market goes down.

The important point to take away here is that when Japanese equities rally the net market impact is Yen negative and viceversa
Quoting ez0770
The important point to take away here is that when Japanese equities rally they net market impact is Yen negative and viceversa
Very much appretiated Sir. I took note of this piece and your previous post. I'll try to digest the scenarios you pointed out as it requires a bit of brain work. You made my day in terms of fundamentals as I didn't know that correlation
Watch for right shoulder being formed right now over next 30 to 45 mins. left shoulder formed over an hour and price points of 108.15 to 25... If this area holds as support we should see another test upwards to 108.50 area and the neckline.. Obvious if we break below 108.1 this bottom formation is cancelled/
Quoting fonx
Action: Foreign 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...
There are a few forces acting on currencies, looking at the Yen (non-exhaustive list) we have:
- the Yen has been a funding currency. People borrow Yen to buy other currencies. In the past the carry trade has mainly been AudJpy or GbpJpy. Since 2008 these plays have been less attractive but I'm sure there are a few running the Turkish Lira or South African Rand. Those are higher risk.
- Risk. Sensitivity to risk is a market phenomenon. When the market is feeling 'strong' it will take greater risk(s) than when it is feel 'weak'. When the market sentiment changes from strong to weak there is a resultant currency flow. So when the market becomes strong it will borrow more Yen to buy stuff, and when the market becomes weak it will reduce its risk exposure and return the borrowed Yen.
- Stock market. Investors into the Japanese stock market have to pay in Yen for Japanese stocks. When the stock market rises many people have bought stocks, and stock brokers and clearing houses are sitting on mountains of Yen which they push out into the market ... therefore the Yen is in plentiful supply and the price drops against other things. When the stock market falls the brokers and clearing houses have to find Yen to pay the clients ... and therefore the Yen supply is reduced because the clients sit on their money for a day at least. This pressure is short term but sustained rising or falling of the stock market will maintain the associated pressure on the currency.
- Global events affect risk sensitivity, as do Japanese earthquakes. Japan is always getting earthquakes, a bit like California, but the big ones cause the market risk appetite to change. After the Fukushima event there was a significant repatriation of Yen and UJ went down markedly. With the two quakes that Japan has just experienced there is every possibility that another quake is imminent ... let's hope it is no bigger than a '6' for their sake.

2¢
Carbon-Dioxide: the gas of life!
Quoting fonx
{quote} Very much appretiated Sir. I took note of this piece and your previous post. I'll try to digest the scenarios you pointed out as it requires a bit of brain work. You made my day in terms of fundamentals as I didn't know that correlation

Thank you fonx, glad I could contribute
Quoting Exodus
- Global events affect risk sensitivity, as do Japanese earthquakes. Japan is always getting earthquakes, a bit like California, but the big ones cause the market risk appetite to change. After the Fukushima event there was a significant repatriation of Yen and UJ went down markedly. With the two quakes that Japan has just experienced there is every possibility that another quake is imminent ... let's hope it is no bigger than a '6' for their sake. 2
Thanks taking the time to help me with this. Fundamentals way is a complex one.

Talking about disasters, I think I remembered reading in a currency wars book that after Fukushima happened, after all the initial movements of currency due to the volatility of the situation, G20 (I think it was G20) agreed to give Japan a hand weakening the yen so that Japan could get some boost via exports. So basically central banks sold yen against their own currencies. I guess that is the reason we have such a upward move from late 2011.
Quoting tom2015
{quote} what do you think the target for EUR JPY it hits 121 707 which is the lowest since 3 years
Back up to 127
Quoting GDR3k
{quote} Back up to 127
What makes you think so?
Newbie here.
My logic today:
I had found that EJ and UJ has some positive CORR between them. While EU and UJ has long term negative CORR (like 1yr graph) on each other.
So today I made a S trade on EJ while B trade on UJ. Hope to cross hedging. But 10 mins after I recognized UJ EJ has different ratio of movement then I some how open a B trade to hedge EJ comepletely. After like a while I close S on EJ and close both position.
Then, earn some coffee money today. ( I feel like next time I need to open half sized EJ hedging for UJ)
I need some advise to about my logic, please feel free to criticizes... lol
Attached Image (click to enlarge)
Click to Enlarge Name: QQ截图20160418201647.png Size: 39 KB
Quoting noctisy
Newbie here. My logic today: I had found that EJ and UJ has some positive CORR between them. While EU and UJ has long term negative CORR (like 1yr graph) on each other. So today I made a S trade on EJ while B trade on UJ. Hope to cross hedging. But 10 mins after I recognized UJ EJ has different ratio of movement then I some how open a B trade to hedge EJ comepletely. After like a while I close S on EJ and close both position. Then, earn some coffee money today. ( I feel like next time I need to open half sized EJ hedging for UJ) I need some advise...
i think you will blow your account hedging without clues
When life gives you lemons, make lemonade
Quoting noctisy
Newbie here. My logic today: I had found that EJ and UJ has some positive CORR between them. While EU and UJ has long term negative CORR (like 1yr graph) on each other. So today I made a S trade on EJ while B trade on UJ. Hope to cross hedging. But 10 mins after I recognized UJ EJ has different ratio of movement then I some how open a B trade to hedge EJ comepletely. After like a while I close S on EJ and close both position. Then, earn some coffee money today. ( I feel like next time I need to open half sized EJ hedging for UJ) I need some advise...
you will draw wrong conclusions like this.... be careful
There is only one way to learn. It’s through action.
Quoting xy76
{quote} What makes you think so?
Gut instinct
EMA 21, 110.186, is the level to watch.

Long now to that EMA, or when price retraces to that point, short to continue downtrend.
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 75 KB
I hold a 8-5 job. I trade 90% daily, 10% H4; 90% technical, 10% fundamental
H,L,LH create on resistance. sell setup
Attached Image (click to enlarge)
Click to Enlarge Name: USDJPYH1.png Size: 25 KB
Quoting pipperboy
EMA 21, 110.186, is the level to watch. Long now to that EMA, or when price retraces to that point, short to continue downtrend. {image}
If only trading was that simple.
Quoting slk
{quote} If only trading was that simple.

Trading can be simple if you let it. The stakeholders want to convince you otherwise, making their accomplishment and pocketbooks larger.
In politics the middle way is none at all.
John Adams

Trading as it is, can be clean without fanciful indicators. Talk is cheap. We shall see price action by this weekend.
I hold a 8-5 job. I trade 90% daily, 10% H4; 90% technical, 10% fundamental
Quoting pressok
H,L,LH create on resistance. sell setup {image}

Looks like don't want to go down...Your H1 setup is deceptive a little bit.
Quoting gstup
{quote} Looks like don't want to go down...Your H1 setup is deceptive a little bit.
​yeah. BE positive now. earn some few pips. trend go up now.
Quoting pipperboy
{quote} Trading can be simple if you let it. The stakeholders want to convince you otherwise, making their accomplishment and pocketbooks larger. In politics the middle way is none at all. John Adams Trading as it is, can be clean without fanciful indicators. Talk is cheap. We shall see price action by this weekend.
I agree, trading can be clean but its not simple. Indicators? I use none.
Think that the USDJPY might extend its recent recovery beyond 110.00 if it breaks the 109.50 mark.
Attached Image (click to enlarge)
Click to Enlarge Name: USDJPY-ProH4_19042016.png Size: 28 KB
11 traders viewing now