logo
  Join        Login             Stock Quote

The Yen Lost Its Status As A "Safe Haven" Currency

 December 27, 2012 09:38 AM


As discussed earlier, the yen is no longer acting as a "safe haven" or "risk-off" currency. This is difficult for some in the FX community to accept, but it's the new reality. The recent drop in the US equity market coincided with declines in the yen. In the past the yen would typically move in the opposite direction of the "risk-on" assets such as equities and commodities, but that relationship no longer holds.

[Related -The CFPB Is Still Out Of Control]

(the big drop is the Republican rejection of the Boehner proposal)

Yen per one dollar (yen weakening)


Much of this is driven by Japan's fundamentals. The new government will ride the Bank of Japan (BOJ) to make sure they ramp up QE to unprecedented levels. The goal is to "print" so much yen that inflation rises from negative levels (where it is currently) to some fixed positive target such as 2%. Any semblance of independence BOJ had is now gone.
The Telegraph: - Mr Abe has said that he will pick someone who agrees with his views on the need for bolder monetary easing to succeed governor Masaaki Shirakawa when his term expires in April next year. 
"At this month's policy meeting, the BoJ said it would examine (setting an inflation target) at its next meeting" in January, he said on television on Sunday.
The strategy may in fact help Japan's exporters in the long run, as the weaker yen makes their goods cheaper. For now however the fundamentals remain weak and the traditional relationship between global risk assets and the yen no longer holds.
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageBaseball, Hot-dogs and Apple Pie Stocks for the July 4th Holiday

Three stocks to own for a piece of Americana – baseball, hot-dogs and apple read on...

article imageTenaris SA (TS): Neutral on Sales, Buy on Earnings

Tenaris SA (TS) shares are outperforming the market today. The extra oomph comes via an upgrade from read on...

article imageContainer Store Group Inc. (TCS) Q1 Earnings Preview: Third Time the Charm?

Container Store Group Inc. (NYSE:TCS) will release its financial results for the first quarter of fiscal read on...

article imageUrban Outfitters, Inc. (URBN): Bottom Fishing or Fishing For a New Bottom

It is time to do some bottom fishing with Urban Outfitters, Inc. (NASDAQ:URBN). Well, it is at least what read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.