Hope for the Yen

Discussion in 'Community Chat' started by wgomez, Aug 14, 2016.

  1. wgomez

    wgomez New Member

    Joined:
    Aug 11, 2016
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    Hello everyone, this is Will Gomez, Currency Strategist with Market Traders Institute. I have been trading professionally for the company for about 4 years now, and to say the least, my life has changed magnificently. Currently I am living abroad in Japan, and as an expat and experiencing the direct impact of the flee to safety first hand.

    As many of you have seen, after the results of the Brexit voting, many serious investors (both speculative and institutional level traders) have decided to flee to the relative safety of the JPY, causing massive appreciation, and thus a numerical/graphical depreciation of all the currencies traded against it. Despite the fact that Japan is a first-world country, it depends very heavily on trading. A whopping 40% of all foods eaten in Japan are actually imported. Japan's economy also gets a significant push from the massive tourism industry. As you can guess, the stronger the Yen, the less buying power foreigners have, and the less attractive a destination Japan becomes. As a general rule then, Japan does not like to maintain a very strong Yen, and the investment community is aware of this.

    As a result, there is a very strong anticipation of depreciation of the Yen, but when is it coming? Prime Minister Abe and BoJ Governor Kuroda are certainly not men that are faint of heart. Looking back as recently as 2012, we can see on our charts extremely volatile moves as a result of the aggressive qualitative and quantitative easing (affectionately dubbed AbeNomics) measures, which caused the entire basket to soar to unprecedented highs. The real question is, can they pull it off again? It would seem as if the options are rather limited at this time, since they have already engaged in experimental tactics like negative interests rates, but then again? Prior to the Brexit, the BoJ was reluctant to do anything hasty, and the results for June fell short of expectations. However, given their track record I would say that they are certainly not afraid of doing what needs to be done to achieve their goal.

    With with the Dow-Jones USDOLLAR Index at past support of a consolidation range and the Stochastic poised firmly in the overbought zone, it would seem that it may get worse before it gets better, but not by much since the USD/JPY is sitting firmly at it's support right around 101.10. The next round of stimulus will most likely be what makes the difference and I will be poised looking for the buy opportunity.
     
  2. jack

    jack Administrator Staff Member

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    Hello and welcome to the forum!

    The BOJ is a beast, but devaluing the Yen has been an ongoing task for quite a while now.. this isn't going to be an overnight drastic thing like Brexit or the EUR/CHF floor being removed. Plus, the various attempts and programs over the years to keep the Yen low have been well known (not shocks) to the market.

    Given this, I think it's better to ask what type of events would cause the Yen to spike in value... Last earthquake that caused a tsunami, for instance, created a huge spike in valuation in the Yen out of things like insurance companies repatriating their investments to pay out liabilities... or the carry trade collapsing when too many hedge funds ran for the door at the same time as world interest rates were getting cut.

    If devaluation is the plan in the long run, then things that disrupt it in the short run will have an almost disproportionate impact.
     
  3. shopster

    shopster Well-Known Member

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    MarketTraders.com (MTI) Review


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    s
     
  4. jack

    jack Administrator Staff Member

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    Shop brings up a good point. You hadn't posted any links or promo material, so I didn't jump on reiterating the rules here.. but we have a strict guideline for vendors and commercial promotion.

    PM me for more details on how to represent a commercial entity on the forum, but generally speaking if you start dropping links and promo material you'll find yourself shut out pretty quickly.

    Otherwise, feel free to join in the community here and discuses trading.
     
  5. the golden gun

    the golden gun RINSE & REPEAT

    Joined:
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    I can't read the words "Currency Strategist" and hot-air titles like it without busting a gut laughing anymore. ;D ;D

    The only strategy is to ride the buckin bronco. This shit only goes up and down.
     

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