Forex Trading - Japanese Yen

Which Forex Currency Tracks What?

Fri, 27 Jun 2008 18:10:37 -0700

Image Caption:
Forex Currency

Image:

Body:

The US Dollar is the most common currency that is commonly quoted in trade across the globe. It is one of the most popular currencies in the world. However, there are several other currencies that are actually not affected by the US Dollar movements in the forex market. These currencies may not be as popular as the US Dollar; nevertheless, they hold their own importance and are backed by several factors in their own countries that make them hold their ground strongly, in case of Dollar fluctuations.

The Euro:

European Union decided to have its own currency in 1999 and introduced it in the forms of coins and notes by the year 2002. Since then, the Euro has been one of the strongest contenders against the US Dollar. The EU consists of Austria, Belgium, Greece, Germany, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. Socialist countries, which are also the largest countries of EU, hold the reigns of government budget deficits. The ECB or the European Central Bank is the lead bank that decides the monetary policies and aims to keep a check on inflation rather than keeping a check on economic contraction. The ECB has kept steady interest rates in past when there had been an economic slow down. Thus interest rates or adjustments in Euro exchange rates are less frequent.

The Japanese Yen:

Japan is a net importer of goods. However, the US and Europe are its major customer for its machinery and other production. Japan especially needs crude oil to keep its economic machinery running like clockwork. Bank of Japan faced one of the major deflationary crises in 1990s when it was compelled to switch to zero interest policy. At this time, Yen experienced the carry trade – when an entity buys a currency at zero interest rate and parks it in another account with high interest rates. In 1990s, the US treasury bonds and German bunds witnessed many such transactions. This means that the Japanese Yen shall always trade lower against the Euro and US Dollar which gives Yen/Euro trade as a viable pair. The only contention offered to this trade is the Chinese Yuan. China is one of the biggest competitors of Japan. Since china also artificially floats its currency, it may weaken the Yen’s value eventually.

The British Pound:

Britain has oil production in North Sea which can influence its economy. This means that Britain has energy reserves and thus, whenever the oil prices have gone high in past, so has the British pound. However, Britain has been experiencing a net increase in its demand for natural gas which has made it as a net importer of natural gas. This means that if there are any outrageous price spikes in the commodity, it would lead Britain to economic exposure. If oil prices start to head north rapidly, Bank of England may need to keep inflation in check and consumer spending may be severely affected. The British pound is also susceptible to strengthening of European currency. Thus, trading Euro with Pound can be quite a liquid trading relationship.

The Canadian Dollar

It is also referred to as "the Loonie" as it has the bird, huard, on its coin. Loony is the French for huard. Bank of Canada is country’s central bank that dictated the monetary policies for the nation. It holds eight meetings in a year to decide upon the interest rates policy. Canada is also world’s second largest reserve for crude oil with more than 175 billion barrels of reserves. The US is its main customer and if there is an increase in the oil prices, they would further strengthen the Canadian Dollar.

The Swiss Franc

It is commonly known as the "the Swissy". It is one currency that is capable of outperforming the Euro if there is dissention between the EU members. It is backed by gold thus is considered one of the safest currencies. Inflation, economic contraction, political stability and excessive economic growth are some of the factors that affect performance of the Swissy.

Article with Image:
Full Size Image occupying Whole width of Column

Australian Dollar Falls to the Yen

Wed, 09 Apr 2008 03:54:08 -0700

Body:

Financial experts at Suncorp see a possible fall in the Australian dollar by approximately 10% against the Japanese Yen this year, and the forecasted slow in economic growth and the central bank ending its rate increases doesn’t help much.

According to Suncorp, investors should consider selling Australian currency they might have now. According to Peter Pontikis, treasury strategist with Suncorp Metway, the Australian dollar will go as low as 85 yen, which is the lowest it has been since 96.

Peter Pontikis said, “For the next one or two quarters, the Aussie’s fundamentals will look very soggy,” as he believes that there has been a shift back in favor of the yen.

A government report recently showed the nations deficit as growing to a record high in February, and consumer confidence has recently dropped as well, this has caused Australia’s sixth largest bank to extend the year’s percent loss of 3.1% against the yen.

Financial analysts estimate that the currency will fall again in April after a report from the Reserve Bank of Australia put fort a statement that the inflation rate would fall back from a 16 year high, due to the economic growth slow down. This means that the central bank will probably not add to its four quarter point increase from last August.

The Credit Suisse Group index says that the current RBA will remain unchanged with its 7.25% benchmark interest rate, and will remain unchanged for the next 12 months.

The loss on the Australian dollar may not reach higher levels because of the belief that interest rates will still be able to interest investors, and that there will remain a global demand for the nations commodities, this being the consensus of the Macquarie Group Ltd, Australia’s largest publicly traded investment bank. According to Joanne Masters, a currency strategist for Macquarie, “The Australian dollar “is one of the standout investments in terms of currency markets,'” “We expect continued outperformance against the crosses.”

Australia’s 6.75% interest rate has made it a sturdy carry trade. A carry trade is where investors by funds in a country that has low borrowing costs and then invest in one with higher interest rates, but the risk they take is that when the currency market fluctuates by too much those profits will be gone.

Still, Pontikis from Suncorp-Metway says that the Australian currency has been very volatile for the last year and believes that it will continue to weaken against the yen. Investors are now discouraged from carry trades, because of the currency fluctuation. Pontikis has said, “You don't buy and hold the Aussie-yen any more, that world ended the middle of last year when you had 20-figure moves up and down, and that carried through into this quarter.”

US Dollar falls against the Yen

Fri, 29 Feb 2008 20:35:31 -0800

Body:

The US Dollar has fallen to its lowest level in three years against the Japanese Yen in forex. It also has hit its weakest point ever against the Euro during forex trading. This comes amid the release of US jobless claims data, revealing a large rise in claims. This has shown that the US economy barely grew in the final quarter of 2007. Recession fears alongside the rising speculation of a large rate cut on the 18th of March is causing the US Dollar to fall at record lows. On the positive side, the falling US Dollar is making US goods cheaper overseas, raising exports and reducing its trade deficit for the first time since 2001. The National Association of Purchasing Management Chicago revealed today that its business barometer had fallen to 44.5 in February which is its lowest level since 2001. This has raised speculation of the likelihood of a 75 basis point Fed-rate cut to 2.25 on the 18th of March.

''It's broad dollar weakness because of concerns about the U.S. economy, U.S. yields, expectations of rate cuts and financial markets,'' said Tom Fitzpatrick, global head of currency strategy at Citigroup Inc. in New York.

''They don't care about the weak dollar. I absolutely believe the market is disappointed'' by Bernanke's comment.

In forex trading the US Dollar fell to a three year low against the Japanese Yen, falling to 103.69 Japanese Yen before settling on 103.74 Yen. The US Dollar fell at an all time low against the Euro, trading at $1.5239 per Euro, the weakest since the euro's inception in 1999. The Euro has gained 2.1 percent against the falling US Dollar for this month.

Japanese Yen rises on reduced carry trades

Mon, 11 Feb 2008 19:30:43 -0800

Body:

The Japanese Yen may continue to rise for its third consecutive day against the US Dollar as unease in the financial market spurs investors to reduce their holdings of the carry trade bought with loans from Japan. Japan is currently on a roll against the US Dollar and the Euro, rising up to 4.4 percent this year. The Group of Seven (G7) estimated a 400 billion dollar write down by global banks due to the losses incurred on the US subprime mortgages. ''The outlook for risk trades looks weak,'' said Camilla Sutton, co-head of currency strategy at Scotia Capital Inc. in Toronto. ''That should strengthen the yen.''

The Japanese Yen rise may show itself as a medium to longer term trend as fluctuation levels have also reduced the appetites for holdings of higher-yielding assets bought with loans from Japan. Implied volatility on one month US Dollar-Yen options rose to 12.2 percent yesterday, from 11.58 percent on Feb. 8. Dealers quote implied volatility, a measured gauge of expectations for currency movements, as part of pricing options. Japan's benchmark borrowing rate of 0.5 percent compares with 7 percent in Australia, 3 percent in the U.S. and 4 percent in the Euro region. This has made carry trading with Japanese loans popular over the past few years.

In forex trading, the Japanese Yen may rise for its third consecutive day trading at 106.96 Yen per US Dollar this morning in Tokyo, after a 0.31 percent gain yesterday that was the largest since the 30th of January. It traded at 155.31 per Euro, after advancing 0.3 percent.

Yen continues to rise on falling stock markets

Fri, 01 Feb 2008 04:50:44 -0800

Body:

The Japanese Yen has continued to rise against the US Dollar, posting its biggest monthly advance since 2001 as further deterioration of global stocks prompted investors to unwind their use of the carry trade, funded with low-cost loans from Japan. The Japanese Yen and the Swiss Franc continued to rise in the month of January against the major currencies. ''The yen and Swiss franc are the beneficiaries of risk aversion,'' said Alan Kabbani, a senior currency trader in Charlotte, North Carolina, at Wachovia Corp. ''Equities got hammered, and people are trying to play safe.'' The Bank of Japan (BoJ), currently holds an 0.5 percent borrowing rate which is the lowest among the developed nations, making Japan the prime choice for the carry trade, where an investor gets funds from a country with low borrowing costs and invests in another that offer higher returns, earning between the spread from their interest rate differentials.

In forex trading, the Japanese Yen was heavily supported as investors unwinded the carry trade. The US Dollar in the past week has been put under pressure with heavy rate cuts and fallouts from global stock markets, helping the Japanese Yen's continued rise to 5.1 percent against the Dollar in January. The Japanese Yen has also risen 3.6 percent against the Brazilian Real, 5.1 percent against the Canadian Dollar and 4.3 percent against the Norweigian Krone.

Japanese Yen hits 18 month high against the U.S. Dollar

Sat, 10 Nov 2007 02:04:43 -0800

Image Caption:
The Japanese Yen

Image:

Body:

The Japanese Yen hit its highest level in 18 months as investors avoided riskier assets bought with loans from Japan. The Japanese Yen rose against all of the major currencies after stock indexes in Europe and Asia reversed gains and U.S. equity futures declined. ''We saw a big sell-off in yen-crosses and there's a pick-up in risk aversion due to the heavy liquidation of carry trades,'' said Lee Hardman, a currency strategist at Bank of Tokyo- Mitsubishi Ltd. in London.

In the foreign exchange, The Japanese Yen rose to 110.96 against the Dollar, the highest since May 20, 2006, before trading at 111.18 at 7:48 a.m. in New York, from 112.60 yesterday. The Euro bought 163.26 yen, from 166.63 last week.

Article with Image:
Full Size Image occupying Whole width of Column

Japanese Yen declines to a 4-year low against U.S. Dollar

Thu, 21 Jun 2007 02:16:55 -0700

Body:

The Japanese Yen traded on a 4-year low against the U.S. Dollar and an all-time low against the Euro due to building speculation that domestic workers are investing overseas for higher returns. ''Japan is having bonus season for employees,'' said Satoshi Tate, a senior vice president of the foreign-exchange division in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan's second- largest lender by assets. ''There's strong demand for yen selling, looking for high-yielders.'' Japan's low interest rates have encouraged a higher level of currency carry trades over the past few weeks.

In forex-trading, the Japanese Yen was at 123.65 per Dollar in comparison to a previous trade of 123.57 Japanese Yen. The Yen was 165.71 per Euro from 165.63. It had declined to an all-time low of 166.12 on June 19. The Australian Dollar has also reached a 15 year high against the Japanese Yen on June 14, buying 103.06 Yen.

Japanese Yen declines against the AUD, British Pound and Euro on Carry Trade

Mon, 18 Jun 2007 04:34:27 -0700

Body:

The Japanese Yen has declined to a record low against the Euro and a 15-year low against the Australian Dollar as speculation increases that investors are continuing to borrow the yen in order to carry trade. ''I expect the yen to depreciate gradually in the coming weeks,'' said Toru Umemoto, chief currency analyst at Barclays Capital in Tokyo. ''Japanese investors are shifting funds from yen deposits to overseas assets to seek better returns.''

In the foreign-exchange, the Yen declined to 165.55 against the Euro, an all time low, before resuming trade at 165.47 Yen. It reached a 15 year low against the Australian Dollar, trading at 104.27 after declining to 104.29 Yen. Against the British pound, it dropped to 244.66 Yen which is its lowest level since September 1992, before resuming trade at 244.53 from 243.95 Yen.

The Japanese Yen hits 3 month highs as carry trades decline

Sun, 04 Mar 2007 22:59:28 -0800

Body:

The Japanese Yen rose to its highest level in almost three months against the U.S. Dollar as Asian stocks fall, prompting investors to discontinue in carry trades on the Yen. A government report also released information stating that investment has risen, which brings up speculation for a possible Bank of Japan (BoJ) rate rise. ''Anything high-yielding or risky is in the firing line against the yen,'' said Sean Callow, senior currency strategist at Westpac Banking Corp. in Singapore. ''We're seeing just how scared the market really is.''

In forex-trading today, the Yen reached 115.63 against the Dollar in the Tokyo trade after hitting 115.39, its highest level since December 8. Against the Euro it managed to reach 152.32 against the Euro and reached 151.76, its highest since November 24. Against the Sterling, the Japanese Yen reached 222.52, a three month high.

Japanese Yen hits 7 week highs against the Euro and the Pound

Fri, 02 Mar 2007 20:56:32 -0800

Body:

The Japanese Yen has reached 7 week highs in forex-trading against the Euro and the British Pound. Risk aversion on the Yen has risen amidst over declining stock markets, a slowing U.S. economy and also unrest over Iran's nuclear programme. The Japanese Yen improvement was also due to unexpected data revealing a rise in household spending, breaking 12 months of decline. Unemployment figures are at 4 percent, which is currently its lowest level in about nine years. ''We still do not believe that current risk aversion would lead to huge unwind of yen carry trades resulting in a significant yen appreciation eventually and believe that recent yen strength has been mainly driven by position squaring by short-term players,'' JP Morgan said in a research note.

In forex-trading, the Euro fell to a low of 154.50 Yen and the British Pound fell to 229.29 Yen. The Japanese Yen is on its way for its largest weekly gain against the Euro since June, 2005.

Japanese Yen Drops to record low against Euro

Fri, 23 Feb 2007 22:28:52 -0800

Body:

The Japanese Yen dropped to its lowest level against the Euro since September 2005 as the Bank of Japan revealed it will maintain interest rate of 0.5 percent, which is the lowest interest rate of the developed world. ''The yen will stay under pressure,'' said Mike Moran, senior currency strategist at Standard Chartered Bank in New York. ''Rates in Japan will stay at where they are now in the next three to six months. The carry trade will carry on.''

In the foreign-exchange, the Yen dropped 1.5 percent to 159.35 per Euro. It also fell 1.3 percent against the U.S. Dollar, reaching an all time low of 159.65 Yen. In the past three months, the Yen has dropped a total of 3.9 percent against the Dollar and 5.5 percent against the Euro.

Japanese Yen rises on speculation of a rate rise

Fri, 16 Feb 2007 18:47:21 -0800

Body:

The Japanese Yen has risen to its highest level since May because of speculation of an interest rate rise by the Bank of Japan next week as the Japanese economy showcases its fastest growth in almost three years. A Japanese government report revealed a rise in gross domestic product (GDP) to 4.8 percent in the fourth quarter, which is a faster level than the U.S. and the European region. ''The yen has benefited from the strong GDP numbers,'' said Marios Maratheftis, a currency strategist for Standard Chartered Plc in London. ''We're going to see more yen strength going into the BOJ meeting as people anticipate a possible rate hike.''

In the foreign exchange yesterday, the Japanese Yen traded at 119.34 per U.S. Dollar compared to the previous trade of 119.27. Japanese interest rates are currently the lowest in the industrialized world and has encouraged investors to borrow from Japan in order to fund higher wielding assets in carry trades. A rise in interest rates next week may lure investors back to Japan.

Japanese Yen drops to a 4 year low due to weak consumer spending

Mon, 29 Jan 2007 21:59:59 -0800

Body:

The Japanese Yen fell to its lowest level against the Dollar in more than four years after a Japanese government report showed a fall in retail sales. The Yen fell against most of the active currencies due to concern about weak Japanese spending and will assist in stopping a rise in interest rates by the Bank of Japan (BoJ). ''The market's scaling back expectations of Bank of Japan rate hikes,'' said Kamal Sharma, a currency strategist in London at Bank of America Corp. ''I don't see a significant turnaround for the yen.'' The Japanese Yen recently fell to a record low against the Euro a few weeks ago.

In the foreign exchange the Yen fell at about 122.19 per Dollar which is its lowest level since December 2002. It also dropped to 157.63 per Euro from 156.99 Euro.

The Yen, Official currency of Japan

Sat, 20 Jan 2007 04:26:52 -0800

Body:

The Japanese Yen is the official currency Japan since 1870, through the new Meiji government. It was established straight after the release of the New Currency Act of 1871. It is one of the most widely used reserve currencies after the US. Dollar and the Euro. Its ISO 4217 codes for the Yen are 392 and JPY.

After World War 2, the value of the Japanese Yen was fixed at 360 Yen per US. Dollar through a plan by the United States of America, related to the Bretton Woods system in an attempt to stabilize the prices in the Japanese economy. This was maintained until 1971, when the Americans abandoned the system. Straight after this, they imposed a 10 percent surcharge towards imports, thus prompting the floating of international exchange rates in 1973. This greatly affected the Yen since imports had a high cost, while Japanese exports received little. The next 30 years showed a gradual rise in value of the Japanese Yen, despite events such as the 1973 and 1979 oil crises. 1985 and the Plaza Accord agreement helped the Yen double in value to 123 Yen per US. Dollar in 1992. April 1995 showed a further strengthened Yen at 80 Yen per Dollar, which made it nearly the same size as the US. economy. Despite being part of the top 5 countries with the most widely used reserve currencies, Japan is currently on the decline as a reserve currency over the past decade.

The Japanese economy is amongst the strongest in the world, with the United States of America having a higher Gross National Product (GNP). Its main imports include motor vehicles, electronics and computers. The United States is its most important trading partner and also trades with Taiwan, South Korea, Hong Kong, China and Singapore. Major Japanese industry comprises of manufacturing, construction, distribution, real estate and services. The goods that Japan relies on through import include oil, foodstuffs and wood, supplied mostly by the United States, China, Indonesia, South Korea and Australia.

Forextradinghq is dedicated to bringing the most important, up to date news regarding Japan’s economic and financial condition and also its major counterparts in the ‘Major Currencies’ section of the website.

Japanese Yen falls to a record low against the Euro

Thu, 04 Jan 2007 01:17:08 -0800

Body:

The Japanese Yen fell to a record low level against the Euro and a two-month low against the Dollar on Wednesday. The Euro has shown impressive record highs against the Japanese Yen as investors hope for a faster decision for high interest rates in the Euro zone rather than Japan. "The euro zone has stronger inflation so there is not as compelling a case for the BOJ (Bank of Japan) to hike rates as there is for the ECB (European Central Bank)," said Daragh Maher, currency strategist at Calyon. Traders expect the European Central Bank (ECB) to increase interest rates by a quarter of a percent to 3.75. The Euro has a yield advantage against the Japanese Yen, with Japanese interest rates rising by just 0.25 percent.

In forex trading, the Euro reached a record level at 158.02 Japanese Yen which is its fourth consecutive high this week. The Australian Dollar also experienced recent highs against the Japanese Yen .