After last year's collapse of the carry trade, along with everything else, some traders wondered what to do with the Yen. Japan, years ahead of everybody else, had cut interest rate to the bone. When the major central banks world wide followed with something similar in 2007 to 2008 it had the predictable effect of causing the yen to gain value, exacerbated by the fact that money, borrowed in Yen to invest in equity markets world wide, was now being paid back. Quote:
Sep. 30 (Guardian UK) -- Japan's finance minister, Hirohisa Fujii, has not ruled out intervention to rein in the yen in an apparent attempt to backtrack on comments favouring a strong Japanese currency because it helps domestic demand.
We now have a situation where interest rates are being increased again for various reasons, but primarily as a crude tool to curb inflation. Australia and New Zealand have been at the forefront. Quote:
Oct. 15 (Bloomberg) -- The Australian dollar rose to a 14 month high after Reserve Bank Governor Glenn Stevens said the central bank can’t be “too timid” in raising interest rates. New Zealand’s currency also advanced.
The Aussie gained against most of its major counterparts after the comment spurred speculation the bank will add to last week’s unexpected rate increase on mounting evidence economic growth will accelerate. New Zealand’s dollar jumped to the highest level since July 2008 as a report showed third-quarter inflation accelerated faster than economists forecast.
A glance at the monthly chart should make it clear to any trader that the scales have been dealt a hefty whack and now we are seeing the correction, or retracement as we like to call it.
Added to that we have useful interest rate differentials again, not in the US Dollar and Pound Sterling as it was way back, but in the Aussie Dollar and Kiwi Dollar.
Thirdly - given that the new Japanese government will not rule out intervention to prop up USD/JPY if it makes any sudden moves this can only strengthen the AUD/JPY and NZD/JPY.
Long, long and long.
Sep. 30 (Guardian UK) -- Japan's finance minister, Hirohisa Fujii, has not ruled out intervention to rein in the yen in an apparent attempt to backtrack on comments favouring a strong Japanese currency because it helps domestic demand.
We now have a situation where interest rates are being increased again for various reasons, but primarily as a crude tool to curb inflation. Australia and New Zealand have been at the forefront. Quote:
Oct. 15 (Bloomberg) -- The Australian dollar rose to a 14 month high after Reserve Bank Governor Glenn Stevens said the central bank can’t be “too timid” in raising interest rates. New Zealand’s currency also advanced.
The Aussie gained against most of its major counterparts after the comment spurred speculation the bank will add to last week’s unexpected rate increase on mounting evidence economic growth will accelerate. New Zealand’s dollar jumped to the highest level since July 2008 as a report showed third-quarter inflation accelerated faster than economists forecast.
A glance at the monthly chart should make it clear to any trader that the scales have been dealt a hefty whack and now we are seeing the correction, or retracement as we like to call it.
Added to that we have useful interest rate differentials again, not in the US Dollar and Pound Sterling as it was way back, but in the Aussie Dollar and Kiwi Dollar.
Thirdly - given that the new Japanese government will not rule out intervention to prop up USD/JPY if it makes any sudden moves this can only strengthen the AUD/JPY and NZD/JPY.
Long, long and long.
Gone to a better place