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Why The Yen Is Surging


@contradevian

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HOLA441

http://www.zerohedge.com/news/2013-08-10/why-jpy-surging

There is a known tendency for JPY to appreciate in August. As Citi's FX Technicals group notes, this tendency is particularly strong when the differential between Japanese and US policy rates is less than 2%, and given the current rate gap, JPY is highly likely to rise again this August. USD selling for JPY by Japanese exporters puts larger downward pressure on USD in August than usual, partly since trading is thin because market players are on vacation. However, in recent years the income account surplus has had a larger impact and along with the major Treasury auctions (interest payments and redemptions) there is an appreciable fundamental flow. In addition, the much-watched technicals (considerably more widely followed in Asian FX markets than the US) are not supportive (of either JPY weakness of Nikkei strength) and given the massively crowded trade, for a foreigner who has purchased the Nikkei on a hedged basis (Long Nikkei and Long USD JPY) this trade could become very painful.
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HOLA442
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HOLA443

Big week of Japan data ahead.

http://www.cnbc.com/id/100954590

* GDP likely strong enough to justify sales-tax hikes

* Some advisers pressing Abe to delay, water down tax hike

* Q2 annualised GDP seen +3.6 pct vs Q1 +4.1 pct

* Machinery orders data to signal slow capex growth

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  • 2 months later...
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HOLA4410
  • 3 months later...
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HOLA4411

So if Yen breaks above 96.5 v $ Nikkei will tumble as will US shares.

I would say more likely to happen than not.

¥ had a vg month and Nikkei fell 14%.

Dum de dum de dum de dum...

1st leg or done? Suspect 1st leg but on verra.

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  • 3 months later...
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HOLA4412

Still looking strong. Needs to below 100.5 and close Weekly ($:¥). Runes suggest that will happen. Bearfest Nikkei and Dev Mkt stocks Q2/3, maybe even into 2015.

NB. Govt bonds have been doing great this year and no wonder.

PMs have good chance of explosion up with such bearishness in shares.

On verra.

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