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USD vs. JPY: The Biggest Loser
Submitted by Nic Lenoir of ICAP
The JPY has been considered the weak currency amongst the majors pretty much universally for most of the last decade. The interesting thing is that frankly one cannot really look at the monthly chart and really say the USD has been stronger. There have been spikes of relative USD including lately from 2004 to 2007, but really overall the two currencies have been trading water against one another, and if anything it's the JPY winning.
The recent change of administration in Japan and the new party's strong Yen policy have caught the ear of many market participants, and in the past month or so the JPY has practically appreciated 10% against the greenback. There are many discussions that the USD is the new carry currency. Well really it feels like it has been a carry currency for a long time. Wasn't 2002 to 2007 a big housing/commodity/emerging market carry trade? I thought that was exactly the point: we have had a loose monetary policy, not just in terms of rate but also in terms of leverage allowed and expansion of the shadow banking system, such that the USD has been a carry trade currency not only because of the rate, but the availability. When the availability disappeared last year, it did not matter that rates were cut to their lowest levels ever.
Bottom line nothing drastic has changed in terms of us replacing the JPY as a carry currency, it's more that with the talk of a strong Yen people act as if there is only one carry currency left. On a weekly chart one sees we are still well anchored in a downtrend channel, though there is an intermediary support seen on the daily channel both in term sof price and RSI. Nothing overly exciting, we could bounce short-term but it remains a bear scenario until we break the weekly down trend.
Enjoy the weekend,
Nic
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A little off topic but we got one bank down today so far. Georgian Bank in Atlanta.
Cost to DIF = $892 million.
http://www.fdic.gov/news/news/press/2009/pr09177.html
Not off topic that much considering what's happening to the dollar lately is related to how the US is dealing (or not dealing) with the various bank failures and other assorted "bankster" problems.
Proof positive that the more fiatcos you print, the higher your debt is as a percent of GDP, the stronger your currency...
LOL.....
Bernanke has a big, fat, green light to continue using "unconventional measures" to mop up the credit problems and sweep everything under the rug.
In the meantime, our Foreign Debt Enablers (aka PBOC) were lapping up our debt and dumping gold this week, evidenced by yet another breakout in the TLT...
Mugabe must be jealous...
"Yeah, baby, let's buy up some more T-Bones that yield less than 3%!!
nvmd
There have been signs here and there the Fed Treasury
charade approaches endgame:
BB & TG talking about immunizing the dollar, naked
shorts and taking banks off life support.
Fed Governor Warsh and Robertson talking about higher
iRates.
Fed Audit hearings. 50% monetization of Ts, Faber and
Japan Hatoyomama talking economic collapse...
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493
PS We like buying USD/Yen based on Big4...
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493
As you guys already know, Nomura(NMR) announced $5.6B of secondary offer. Expect another big banks to follow. Mizuho would issue much more equities. They are hoarding cash, in the form of JPY.
The US Dollar and the Japanese Yen...
Two basket case, carry-trade currencies brought to you by the most corrupt and incompetent central banks outside of the Third World.
Keep up the great work gentlemen.
The sterling will be the biggest loser of them all
One day, relative value comparisons between paper objects that have no value will seem utterly incomprehensible
My USD INDEX indicator continues to give *bullish* warnings.
MORE:
http://www.zerohedge.com/forum/market-outlook-0