New York
Coaches Blog
A blog by the TradingMetro coaches

Australia and the Yen

The USD/JPY briefly fell to 83.60.  This was followed by a spate of stories all of which indicated that the government of Japan is extremely displeased- and critics of the Prime Minister are publicly upbraiding him for not already having acted. The Prime Minister protests that on the contrary – the Yen is his top priority.

We know that Prime Minister Kan and Mr. Shirikawa, the Governor of the Bank of Japan met two days ago – which was before the most recent low was recorded: But no agreement appears to have been reached. 

The Minister of Finance is talking publicly about the possibility of intervention- public pressure which suggests that the BOJ has not yet fully committed to the idea. But to make intervention work will require the BOJ which is next scheduled to meet on September 6 and 7. 

Given that the Japanese exporters have been clobbered by the strength of the yen and that the government is clearly freaking out over it do not be shocked if even more pressure is applied to the BOJ.  If you see an announcement of an emergency meeting of the BOJ it will be for one reason and one reason only. 

Be prepared to sell the yen.

An Aussie Update

Meanwhile, for the second time this year, we are seeing the dreaded words "hung parliament" after an election. This time it is in Australia. Mr. Abbott appears to have a slight edge over Labor BUT please be aware that up to two million irregular ballots remain to be counted- these comprise about 14% of the total. 

An irregular ballot can be one that was cast at the wrong polling place, a mail in ballot that arrived late, etc.  If Mr. Abbott and his Coalition (essentially Conservatives) retain the 74 seats that they have won then they can reasonably be expected to add the two independents who oppose the 40% mining tax that the Labour party wants to impose- and Mr. Abbott becomes prime minister- and this could be AUD strengthening. But if the remaining votes alter the electoral landscape a different result is possible.

Counting the remaining votes may take until September 3, so the AUD/USD, AUD/JPY, etc could be very volatile for this reason alone for the next two weeks.

Meanwhile S&P has downgraded Irish bonds on concerns over the cost of recapitalizing Irish banks, concerns rise as to Greek banks, etc- This is still the year of the Euro and the EU story is not done yet.  Which is part of the reason the Yen has been strengthening, leading to a crisis in Japan, etc- This really is an interconnected world and we need to remember that when we look at currencies and their fundamentals.

Tagged as: , , ,

SocialTwist Tell-a-Friend

Leave a Response

Trading Metro

Before diving into the legalese below, use your common sense when trading. Rely on yourself to define trade execution, don't trade with money you cannot afford to lose, and know the risks of trading. Be responsible, be honest, and use common sense.

Online trading, especially that on margin carries a high level of risk and may not be suitable for all investors. Opinions expressed at Trading Metro are those of the independent authors and do not necessarily represent the opinion of Trading Metro. Trading Metro has not verified the accuracy of any claim or statement made by any independent author. It's your responsibility to ensure the veracity of information presented.

Any solutions, opinions, news, research, analyses, prices or other information contained on this website, by Trading Metro, its employees, partners or contributors, is provided as general market commentary and tools, and does not constitute investment advice. Trading Metro will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Information on Trading Metro is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained on Trading Metro is governed by the Terms and Conditions of Use. Please click the link to view those terms. Follow this link to read our Editorial Policy and our Privacy Notice.

Feedback Form