In case anyone had any doubt about which currency would see strength during a flight from risk – The Japanese Yen was the clear winner overnight on fears of the U.S attacking Syria.
Kuroda and the Bank of Japan’s QE program (which is 3X as large as that of the U.S) has taken a serious hit here, as pairs such as AUD/JPY have more or less 100% completely retraced since the stimulus started back in 2012.
As I’ve mentioned here time and time again – JPY will always take a large portion of “safety flows” as the country of Japan holds most of its public debt domestically, providing little chance of default. When safety is sought – the Japanese Yen (JPY) makes sense for that reason alone.
I’d also suggested that the “easy money” being short JPY ( based in Kuroda’s QE plans set to continue) has already been made as we are now seeing what will likely happen should “global appetite for risk” come off. All the printing in the worlds can’t keep up with the flow of money “back into Yen” when risk is unwound.
What we “didn’t see” – is strength ( or further weakness for that matter ) in USD as today looks like “yet another” doji candle, and flat as a pancake.
I don’t believe USD is being considered a safe haven currency any longer, and am still of the mind-set that it will sell off.,,,regardless of further actions in a military sense.
I’ve entered several positions “long JPY” and continue to hold several positions “short USD”.
Hi Kong, with the threat of war diminishing, yen pairs seems to have resume their upwards movement. Is this just a bounce with more down coming?
Quite the rip/ spike here yes – and juuuust running into resistance here now. Literally right here , right now.
Too soon to tell in my eyes….as we’ll need to see how things shape up on Tuesady. Yen weakness could persist if “risk” is back on.
That is “if” risk is really back on.