[quote author=“mtdoc”]I don’t know if anyone is following the USD/JPY or currency markets, but the value of the yen relative to the Dollar has been following (or leading?) the markets closely lately. On Friday the Yen rallied hard relative to the dollar (so the USD/JPY pair fell hard - breaking support).  I suspect it will bounce back some but nevertheless, the unwinding of the carry trade continues.  I’m still not sure how much of an effect this is having on US Equities but if it is playing a role then a drop in USD interest rates will only make things worse.  The Fed really is stuck between a rock and a hard place.

mtdoc,

If you plot the JPY/USD versus major indices, you will see a great deal of correlation.  I have been tracking it closely since July.

IMO, things are better now since carry traders have deleverged their portfolios significantly.  However, jpy value rises when the markets pulls back and vice versa.  Note that the BOJ does not like yen/usd lower than 115.  However, decreasing US rates will weaken the usd all things.  I think the yen/dollar affects the global markets.

Fed is in difficult position.  However, I think the most issues are the economy, consumer spending and corporate investment.  I do not know if a fed cut even of 50bps will solve these issues.

[quote author=“iBuyer”]
mtdoc,

If you plot the JPY/USD versus major indices, you will see a great deal of correlation.  I have been tracking it closely since July.

IMO, things are better now since carry traders have deleverged their portfolios significantly.  However, jpy value rises when the markets pulls back and vice versa.  Note that the BOJ does not like yen/usd lower than 115.  However, decreasing US rates will weaken the usd all things.  I think the yen/dollar affects the global markets.

I agree.   I’ve been following the USD/JPY closely for a few months now. The rise of the Yen began in June and actually preceded the US market correction. Since Early Aug it has followed the US indices very closely.  On most days, if you have an intraday chart of USD/JPY next to SPX you can watch them move in concert- almost tic per tic.  What is interesting is that on Friday the USD/JPY fell farther and harder than the US markets. If USD/JPY does not bounce Monday it may be a good tell on where we’re headed

[quote author=“mtdoc”][quote author=“iBuyer”]
mtdoc,

If you plot the JPY/USD versus major indices, you will see a great deal of correlation.  I have been tracking it closely since July.

IMO, things are better now since carry traders have deleverged their portfolios significantly.  However, jpy value rises when the markets pulls back and vice versa.  Note that the BOJ does not like yen/usd lower than 115.  However, decreasing US rates will weaken the usd all things.  I think the yen/dollar affects the global markets.

I agree.   I’ve been following the USD/JPY closely for a few months now. The rise of the Yen began in June and actually preceded the US market correction. Since Early Aug it has followed the US indices very closely.  On most days, if you have an intraday chart of USD/JPY next to SPX you can watch them move in concert- almost tic per tic.  What is interesting is that on Friday the USD/JPY fell farther and harder than the US markets. If USD/JPY does not bounce Monday it may be a good tell on where we’re headed

mtdoc,

Well, Asia Monday will for sure be suffering the hang over from Friday in the morning.  Watch the yen then…  The hope is that the afternoon and europe opening stablizes the market.  Although you mind need to self medicate to fall asleep.

I’m tempted to borrow yen at 112.5.  I see resistance at 112 and again at 110.  Below 110, the BOJ will start doing stuff.  On your carry trade, what is your long yield currency normally?

BTW, I PM’d some rants to you

[quote author=“iBuyer”]

I’m tempted to borrow yen at 112.5.  I see resistance at 112 and again at 110.  Below 110, the BOJ will start doing stuff.

What can they do?  -surely they can’t lower rates.

On your carry trade, what is your long yield currency normally?

Not sure what you’re asking. I’ve no currency trade currently. Have considered going long Yen futures but never pulled the trigger.  Am also considering some far OTM Leap puts on YUK - these would just be a hedge on further unwinding of carry trade and dollar devaluation.

BTW, I PM’d some rants to you

  Got it - thanks!   Will get back to you but running out of time today.

Something I’ve not been clear on :

What, these days, causes the yen to rise? What should we look for before the yen rises, before carry trade occurs, before america’s economy recedes?

[quote author=“mtdoc”]

On your carry trade, what is your long yield currency normally?

Not sure what you’re asking. I’ve no currency trade currently. Have considered going long Yen futures but never pulled the trigger.  Am also considering some far OTM Leap puts on YUK - these would just be a hedge on further unwinding of carry trade and dollar devaluation.

My mistake. I thought you were thinking or have put on the “carry” trade before. I would be very cautious going long yen at these levels.  Perhaps, if it recedes to 118…  The negative carry is pretty large.

[quote author=“superbaka”]Something I’ve not been clear on :

What, these days, causes the yen to rise? What should we look for before the yen rises, before carry trade occurs, before america’s economy recedes?

Two major reasons I see:

1. Derisking or unwinding of carry trade
2. Domestic issues in Japan.

Not sure about the second part of your question, sorry. FWIW, Japan is going no where fast.

[quote author=“iBuyer”][quote author=“mtdoc”]

On your carry trade, what is your long yield currency normally?

Not sure what you’re asking. I’ve no currency trade currently. Have considered going long Yen futures but never pulled the trigger.  Am also considering some far OTM Leap puts on YUK - these would just be a hedge on further unwinding of carry trade and dollar devaluation.

My mistake. I thought you were thinking or have put on the “carry” trade before. I would be very cautious going long yen at these levels.  Perhaps, if it recedes to 118…  The negative carry is pretty large.

Yeah, you’d be fighting the BOJ on top of that! They will try very hard to protect their exports/exporters.

[quote author=“quantman”][quote author=“iBuyer”][quote author=“mtdoc”]

On your carry trade, what is your long yield currency normally?

Not sure what you’re asking. I’ve no currency trade currently. Have considered going long Yen futures but never pulled the trigger.  Am also considering some far OTM Leap puts on YUK - these would just be a hedge on further unwinding of carry trade and dollar devaluation.

My mistake. I thought you were thinking or have put on the “carry” trade before. I would be very cautious going long yen at these levels.  Perhaps, if it recedes to 118…  The negative carry is pretty large.

Yeah, you’d be fighting the BOJ on top of that! They will try very hard to protect their exports/exporters.

How?  By buying even more US treasuries?  Perhaps they could buy some   From The Chinese

USD/JPY did bounce some today but will hit trendline resistance again soon.

[quote author=“mtdoc”][quote author=“quantman”][quote author=“iBuyer”][quote author=“mtdoc”]

On your carry trade, what is your long yield currency normally?

Not sure what you’re asking. I’ve no currency trade currently. Have considered going long Yen futures but never pulled the trigger.  Am also considering some far OTM Leap puts on YUK - these would just be a hedge on further unwinding of carry trade and dollar devaluation.

My mistake. I thought you were thinking or have put on the “carry” trade before. I would be very cautious going long yen at these levels.  Perhaps, if it recedes to 118…  The negative carry is pretty large.

Yeah, you’d be fighting the BOJ on top of that! They will try very hard to protect their exports/exporters.

How?  By buying even more US treasuries?  Perhaps they could buy some   From The Chinese

USD/JPY did bounce some today but will hit trendline resistance again soon.

BOJ open market ops can be selling yen bonds

Just thought I’d post a chart to see what the USD/JPY is facing. The bottom trendline is a multi YEAR trendline.

[quote author=“mtdoc”]Just thought I’d post a chart to see what the USD/JPY is facing. The bottom trendline is a multi YEAR trendline.

I am imagining that with events of the last few days that the long term trendline held.  And I suppose that some kind of flag/pennant/triangle (sorry, I don’t know the difference) has formed.

Bullish for the dollar vs the Yen?

Update on the USD/JPY. It’s getting uglier..:o

H and S failure on 60 min chart:

And for the big picture - a 20 year - monthly chart:

Sayonara Carry Trade.

mtdoc,

For the big picture, can you start at earlier years e.g. 1980.

As for the triangle, perhaps should be a descending triangle rather than a symmetrical triangle because 1995 to mid 1998 is an impulse.  I see a long term support at 102 yen.  Near term US dollar should stage a rebounce to around 109 before declining to 102.  A descending triangle should be completed when USD/Yen is 102, a multi-year USD/Yen rally ensues.

Caveat: Above reading is made without the benefits of price behavior before 1993.

[quote author=“Mace”]mtdoc,

For the big picture, can you start at earlier years e.g. 1980.

As for the triangle, perhaps should be a descending triangle rather than a symmetrical triangle because 1995 to mid 1998 is an impulse.  I see a long term support at 102 yen.  Near term US dollar should stage a rebounce to around 109 before declining to 102.  A descending triangle should be completed when USD/Yen is 102, a multi-year USD/Yen rally ensues.

Caveat: Above reading is made without the benefits of price behavior before 1993.

Sorry Mace-

TOS/Prophet data only goes back to 93. I’m sure it’s availiable on the web somewhere - no time to look now though- i’m off to work.

BTW - IMO the dollar is getting due for a bounce - perhaps when the Fed meets in 2 weeks and *doesn’t* cut rates?  I don’t know. I thiniking of going short Euro futures for a trade.  Any dollar bounce will be suspect though.  We shall see.

Interesting economic times - these, eh?