Why Watch the Japanese Yen – JPY

The Japanese Yen is considered a safe haven currency primarily because the majority of Japan’s debt is held locally, by japanese citizens. Unlike in the Unites States where , in case of default – many countries would be at risk of loss – Japan’s debt is mostly held locally and therefore represents a higher degree of safety.

A weaker yen translates into increased competitiveness for Japanese companies overseas, since they can provide products and services their cheaper and still reap a healthy profit in yen when they repatriate their profits from abroad.

When currency traders start to see money flowing “out” of the yen – this is often a sign of “risk on” behavior, as the money is seen exiting the safe haven protection of the Yen – and likely filtering into higher risk currencies and assets.

Overnight, we’ve seen a considerable wave of Yen selling as many other currencies have made considerable ground (USD some 80 pips as well CHF for 100 pips, as well AUD , NZD and even the EUR) So keeping a close eye on the Yen can prove to be valuable indication, that a turn is near.

I am currently long USD/JPY, AUD/JPY, NZD/JPY as well long EUR/JPY – AUD/USD, NZD/USD and short USD/CAD.

11 Responses

  1. Ben November 14, 2012 / 10:04 am

    NUGT is a touchy little bugger today, isn’t he.

    Good to know about the Yen, thanks.

    • Forex Kong November 14, 2012 / 10:21 am

      As suggested earlier….its a total ball breaker that NUGT – and if it wasn’t my “gambling money” – I likely wouldn’t have touched it…..although now at these levels…..it would be a no brainer in my view – even 500 shares and a full buck stop type thing….just set it and forget it.

      Me….Im out til March with the calls that have really only taken a mild hit really.These intermediate type turns are hard to pin down to a single day…..and for me….doing this for a living – u have to continue to push – enter / fight / trade – if you wanna eat so………..shoulda coulda woulda sure….today would be a great entry as opposed to mine a couple days ago. But…..u can’t win if you don’t buy a ticket.

      • Ben November 14, 2012 / 10:23 am

        Makes sense, thanks – set it and forget it with the confidence that the movements will happen at a rough date range.

        • Forex Kong November 14, 2012 / 10:42 am

          Normally….I watch this stuff like a hawk, and pull profits as fast as I see them – but in this case…..with the gold and miners in particular…..I’ve set aside the capital as a longer term trade – knowing the “gold bull” is very very difficult to ride. It will literally….do anything and everything to throw you off – before it heads North! – U gotta hang on!

  2. Ben November 14, 2012 / 10:46 am

    I’m on for the ride and I like the analogy. Being excited to wake up at 0630 is a feeling I could get used to.

    • Forex Kong November 14, 2012 / 10:48 am

      Right on man……this will be a good ride for sure.

  3. hf November 14, 2012 / 2:37 pm

    just added more GDX mar 55 calls @ 1.21, gulp

  4. hf November 14, 2012 / 2:43 pm

    filled on some xgd.to @ 19.58
    gulp again

    • Forex Kong November 14, 2012 / 3:14 pm

      Wish I was in your shoes Hf…as my dollars / commitments to the gold trade are all but absorbed. I will have a peak sometime in January and see where I´m at. So….back to the currency side to continue – woth same ol same ol…..as the dollar continues to hang on / frustrate .

  5. kreks November 14, 2012 / 5:16 pm

    Nice work on those JPY trades! I was thinking of you with envy as I got stopped out on my AUD trade at breakeven, for a second day in a row…. argh!

    I’m going to keep an eye on USD/JPY, esp the Fibo level and resistance at 80.65. Although yen sentiment has been excessively bearish recently, more weakness could beget even more weakness and there could be a nice move there. Good work, Kong.

    • Forex Kong November 14, 2012 / 5:21 pm

      Thank you -I spend alot of time and energy researching these trades and concepts…its great when things work out.

      Now……you will likely find larger moves in the commods vs JPY in that they really fly in times of risk on….keep your eyes on those as well as USD….as we STILL HAVENT EVEN SEEN THE DOLLAR ROLL OVER – and still making profitable trades.

      When the dollar flops here….JPY is gonna flop harder.

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