Implications of JPY Bounce – Risk Off

You can’t just “write off” the Japanese Yen based in the recent weakness – and the massive efforts put forth by the Bank Of Japan. No matter how you slice it – the Yen “still represents” a safe haven currency based in fundamentals that will likely persist for many years to come.

When things get “tricky” the Yen is gonna get bought hand over fist – no matter what the BOJ wants.

Now… looking to draw some kind of intermarket correlation here…it’s simple – JPY bought = risk off.

As bizarre as this may all appear to newcomers – I am currently positioned “long JPY”………

JPY going up = risk off. You can watch any number of currency pairs as well as the symbol “FXY” for further indication.

Eyes open people!


Stay safe for now.

12 Responses

  1. ukmark62 April 30, 2013 / 4:47 am

    You mentioned a few weeks ago that the US is heading for a major trainwreck (stocks, bonds, currency and housing collapsing end of 2013/early 2014).

    Fundamentally, I agree 100%. However, since we have had the central banks recklessly printing and governments getting deeper into debt, the stock market has soared and the MSM would have us believe that Christmas is now 365 days a year etc.

    What do you see as the catalysts for this trainwreck – and do you foresee a way that it will be averted? My instincts are that TPTB want to engineer a crash (so as to pick up cheap assets again), but that is only a hunch. PS, have you read about the “Contracting Fibonacci Spiral” – an interesting piece by David Petch. It also suggests the same time frames for the house of cards to come down (before another sharp leg up and final collapse towards 2018). I also respect the likes of Felix Zulauf and Charles Nenner, who also have pretty dire predictions. I realize nobody is correct 100%, but the above mentioned seem to have a balanced view of things (I don’t think either are permabulls or permabears).

    • Forex Kong April 30, 2013 / 10:52 am

      UK Mark,

      We agree on the fundamentals which is great – so yes of course, on to the “how” and “when”.

      This is always the hard part, and I don’t particularily “love” making predictions in this area. I trade the fundamentals, but allow my shorter term tech to more or less “make these predictions for me” – by way of either keeping me out of markets as we wait, or signalling that an opportunity is directly in front of me. The timing of any long term prediction is near impossible – BUT!

      We know a couple of things.

      The longer lasting effects of QE will ultimately be devastating for the U.S economy, as with each round of easing – we see lesser and lesser effect. Sooner (rather than later) the skin comes off the ball. This coupled with the massive debt load of the U.S in an environment that is not even close to recovery ( in my view ) puts yet another iron in the fire. As well lets not discount the trainwreck in the E.U.

      I can’t say for sure “what exactly” the catalyst will be with so many variables in play, but imagine it will come from the EU Zone, and that the U.S “powers that be” will look to use this as an excuse to do their magic – and crash markets/rinse and repeat.

      I imagine 2013 will trade flat to down here near the highs, working to further intice new money…as 2014 takes a more serious dive. Obviously they will continue to prop this up as long as they can – I just can’t imagine it lasting much longer.

  2. ikti April 30, 2013 / 4:58 am

    I see my risk on/off mechanical system is aligned with Kong. Good for me! 🙂

  3. schmederling April 30, 2013 / 8:27 am

    hmmm – I see commod’s taking break for air? Perhaps a quick rest…

  4. schmederling April 30, 2013 / 8:28 am

    However DXY will continue lower for now…. no impact related to pairs…

  5. schmederling April 30, 2013 / 8:30 am

    CAD shorts are getting killed – this should continue a little longer….. long way down..

    • Forex Kong April 30, 2013 / 8:37 am

      Yes…Im having a very nice day here as I am well into a number of trades long JPY against practically everything…and short USD against practically everything.

    • Forex Kong April 30, 2013 / 9:40 am

      A confirmed “failed” USD cycle here now – and gold still can’t find a move.

      • schmederling April 30, 2013 / 11:35 am

        Tomorrow – either way we will have our answer in the PM sector. This is what is called the witching hour – WTI in the same funk – holding pattern until the boys decide to release the hounds….. have faith…:) or not…. he he

        • Forex Kong April 30, 2013 / 11:50 am

          Why tomorrow? – What’s the significance?

  6. schmederling May 1, 2013 / 12:10 am

    The Fed meeting – Gold as been working off it’s recent gains – also silver has some catching up to do as well. With the dollar fall today – tomorrow is just as good a day as any – thursday at the latest.

  7. schmederling May 1, 2013 / 12:15 am

    I also think & have for months that more money printing is on it’s way…

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