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Goldman On JPY Pairs: "Increased Intervention Risk In $/JPY"
Tommy Stolper, who would rather forget his recommendation track record from 2010, has just released the following note on what to expect for the JPY:
1.The Earthquake and the JPY. Our thoughts are with all those hurt or affected by the horrific Japanese earthquake and tsunami. When natural disasters strike it is very difficult to assess the impact of the supply shock on the economy and on markets, partly because so many potentially offsetting things happen at the same time. In particular a natural disaster is typically followed by a strong policy response, which also seems to be the case in Japan currently. In terms of economic performance, sudden sector shifts can be expected, away from industrial production and consumer demand towards faster growth in the construction sector. The net impact of these shifts on the current account is highly uncertain. In terms of policy response, fiscal expansion and monetary easing tend to have an offsetting impact on the currency. And the same applies to investment flows. Many Japanese institutional holdings of overseas assets tend to be FX hedged currently. Repatriation may therefore only have a relatively small positive impact on the JPY. On the other hand recently accelerating foreign purchases of Japanese stocks may slow – a marginal JPY negative. And to make things even more complex, all these potentially offsetting effects may occur at different points in time, leading to more choppy price action overall. The clearest currency impact from the earthquake may therefore be an increase in volatility, some of which we have already seen.
2. Increased Intervention Risk in $/JPY. Increased volatility and a wider trading range from current low levels in $/JPY mechanically increases the likelihood of marking new record lows below 80. As seen in the past, this could lead to some disruptive price action. We doubt that the Japanese authorities would want to expose their economy to a potential exchange rate shock in addition to the earthquake. The authorities have already made clear that they will do their utmost to stabilise markets, and while the focus has been on liquidity interjections in local money markets, this commitment likely includes an FX intervention threat in case of disruptive $/JPY price action.
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Godzilla is the black swan.
Hey, I resemble that remark!
I was just reading an economic analysis of Japan's situation and it would appear that the authour Shaun Richards is not as sure as Goldmans appear to be that this Yen strength will be sustained.
Agreed 100%.
The earthquake has made two developments highly probable :
1. Indefinite suspension of any rate hike chatter .
2. A massive round of quantitative easing .
Both are Yen negative .
If anyone bought the spike towards 80.50 a few hours ago then kudos to you , I was drawing trendlines at the time and missed the oppurtunity .
Thanks. I'll take kudos on that one. :D (albeit sheepishly...)
Not necessarily yen negative all around. First, no one ever expected the Japanese to raise rates. Second, the yen is being repatriated in droves (as in a government "mandate," wink, wink...).
The USDJPY pair will probably stabilise while the EURJPY goes down because talk of the Japanese buying Euro bonds is now out the window. I am also sure that the Bernank has something in mind for the yen and he won't let a good neighbor down. Dollar ramps, prolly big-time.
Glad you got in on it Orly :)
That's true , in hindsight I don't know why I even mentioned about rate hikes ! Yen repratriation is only a short term booster though ; far more supportive will be the speculative vultures eyeing those huge stops below 80 ,as Madhedgefundtrader mentioned in his article earlier .
I hope USD/JPY does stabilize but now doubt it's in a triangle pattern right now , and they usually precede the terminal thrust . EUR/JPY is definitely on my target list and I'd go one step further by saying that in addition to halting further Euro bond purchases , the Japanese insurance companies/banks who bought the initial offering will start to liquidate their current holdings ( applies far more to the latter ) . Even the Bernank is surely running out of ammunition to rescue friends in need ( i.e everyone ) .
Not sure if you follow Elliot Wave Orly but regarding the USD I'm torn between what looks like a current 5th wave down on the Dollar Index and a very robust rising trendline support on said index . Today's ( and Friday's ) moves in EUR/USD and GBP/USD makes me think the former could be more likely .
I posted two hours before your post that the YEN was a short.
There is no time to procrastinate.
Prepare.
Get your bug-out bags, your PMs, your firearms, your garden seeds, your ammo, and your first-aid kits, and . . .
GET THE HELL OUT NOW!
Get out of where? Go to where?
He's gonna go live in the woods and watch his seeds grow to tomatoes.
Broke and the world falling apart? Just make up some money to pay for it. Easy.
It's more sane to get off the merry go round and plant seeds.
I really want to say something. Instead, I'll watch GS get their ass handed to them. Call it Karma.
God does work in mysterious ways.
My usd/jpy long got BLOWN OUT! I'm flat That nuclear hot potato is not on my plate. Thanfully it was a small position. The stop hunting loosers like the Sunday open.
My usd/jpy long got BLOWN OUT! I'm flat That nuclear hot potato is not on my plate. Thankfully it was a small position. The stop hunting loosers like the Sunday open.
Gaps are fairly common on the open.
:D
Double post. Not my doing. The option @ 81.50 got taken out. I'm very familiar with gaps. I reloaded my core gbp/jpy trade. 130
Okay, just so you know. It probably wasn't stop-hunting. More to do with a thermonuclear breakdown...
Nuclear breakdown would be a bit more appropriate. It gets thermal in a couple of days. The little species took advantage of the trade. The 100 pip(opening) spike in usd/jpy was a lesson in stop hunting. Gaps aside. You seem to have a pretty good understanding of the currency markets, and I appreciate your posts. I like your assertiveness.
Thanks. I appreciate that.
Wait 'til things get more normalised and I get on a roll!
Best of luck to you!
You are very smart! Good luck to you as well!
Melissa Francis is a dude.
I always thought she was just a cunt. Which is it, a dude or a cunt? You can't have it both ways.
Put it this way: She's hung.
+315 rads
Can you say Yen Carry trade ov-ah.
And that does not bode well at all for the Ozzie dollar.
Aussie Dollar
You say Aus, I'll say Oz. And I'll be in Scotland before ye.
:D
Fair enough Darling. Happy Face.
We need your help,come to us and make your voting(it takes 5sec from you):
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tell it to friend,we need to rich every interesting one to make his vote for FED existence,thank you to all for your choice
usd/jpy back up above 82...... heading to 83?
Rub it in! Trade well!
I'm suprised at the strength of the EUR just based on comments at the Friday European Union Meeting
Actually gonna close this trade made 53 pips and I am not confident the USD continues up against JPY
you are on the right side of a government push, unlimited ammo today, I might let it run
My long usd/jpy got blowtorched at open..had a large stop , but not a 140 or so pip. better off small position and no stop..IMO..My audusd short on that insane spike friday is workin ..yen is too volitile tonight..let it calm down before any new entries..we are still trading below the kumo and tenkan and kijun have merged..let it play for awhile.4hr.
We still haven't got the blow-off top in AUDUSD yet, RF. I'm looking at Wednesday night, US time, -ish. Should be about 1.0233. Then, sell it hand-over-fist, maybe keep the position open for four months.
It's gonna be a Duzy!
Gotta check the Economic calendar, and flows from some bank friends. I'll look into it for sure! Thanks for the tip.
Well, if you get anything solid from your friends, please let me know.
I am using technical analysis only with an occasional news catalyst. Just going by the strange habits of the Aussie dollar ;), it loves the double-top and it likes to reach the top in one fell swoop.
Here it is at the Bollinger Band moving average on the H4. We are likely to see a turn from here to the top to ~1.0233, which would mark the near-term double-top. It could get there pretty quickly, with nary a down candle on the H1 until it does.
Also, the rising wedge in AUDUSD is starting to buckle under, as there is the beginning of a distinct curve in the wedge. There should be one more push up, a retracement back to fit the curve, sideways trading for a bit (a day at most...) and then the lift is going down, probably for a long, long time.
It is just all chart timing for me but I would certainly love to hear more concrete information if you have it.
:D
Sounds like you are swing trading on wide stops. I like that. It means you are using margin well.
Hope this dick is short Yen.
Quick, raise margins!
Friggin Goldman prick...
Economy Minister Kaoru Yosano says earthquake will not impact Japan's overall economic trend. Well that makes sence.ya right. Part of a building might have hit him in the head.
20 year downtrend, man speaks true