As just one of my tells on the health of global risk appetite, I continue to key off this U.S. Dollar/Japanese Yen currency cross. The initial support at 97 should not have been all that surprising (see here and here), but whether the Dollar can build on that is going to be revealing. The higher this chart goes, generally speaking, the better it has been for equities. The lower it goes, and the more volatile it gets with a strong Yen, and the dicier our markets have become.
This may simply be correlation instead of causation. But I suspect failure to hold 97 beyond this bounce will be a warning sign for stocks.
Also note that many eyes are still on that big, round 100 number above.
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I’m glad to be long since i suspect we may get another day or two up, but I plan to lighten up on the bounce. My main concern is rising interest rates in the US, and i think that is primarily what the market has been reacting negatively to recently.
It’s entirely about interest rates….as it “has been” throughout the entire bottoming process in USD/JPY through 2011 and most of 2012 – and it’s ultimate reversal.
Bottom line – U.S must raise rates and Japan can sit at zero forever – solidifying JPY as the “lowest on the totem pole” as Carry Trade funding currency.
An oldie but a goody: http://forexkong.com/2012/12/26/currency-wars-japan-turns-up-heat/
Good read….so how do you expect this plays out?
It really does depend on your time frame, as fundamentally my current position is “short humanity and long interplanetary travel”
Short/Med term I will be a buyer ( in truck loads ) of USD/JPY some time around Sept.
Holy shit, THAT is funny
Sad but true….as Mexican authorities have recently shut down my “spaceship rooftop patio project”.
I’m lookin at Scaled Composites and “Spaceship 1 / 2” ( now purchased by Branson as Virgin Galactic) as a next best option.
Still awaiting my entry for ultra short balls to the wall at S&P 500 at 1800. The blow off top is coming and this “correction” LOL 4% just makes it sooner.