What's happening to the yen? JPY has depreciated by 15% against USD in the past 3 months and as
much as 30% against USD since October 2012. See Chart 4 below.
Chart 1: JPY-USD & USD-JPY's weekly chart as at Dec 12, 2014 (Source: Stockcharts.com)
The
long-term uptrend for JPY-USD is still intact provided it does not
break below the 0.008 mark (or 1 JPY = 0.008 USD). Alternatively, the
long-term downtrend for USD-JPY is still intact provided it does
not break above the 125 mark (or 1 USD = 125 JPY).
A breakout of this 40-year trend
would have serious ramification, which I am not in the position to
examine. However, given the difficulty that the Japanese government is facing
in trying to revive the economy, one cannot rule out the possibility that Japanese
government may adopt extreme measures, including a cheap yen policy to jump-start the moribund
economy. The recent electoral victory for Abe could help to strengthen his hands to push through these measures. Who knows?
Chart 1: JPY-USD & USD-JPY's monthly chart from 1960 to Dec 12, 2014 (Source: fxtop.com)
Note:
In
addition to the disclaimer in the preamble to my blog, I hereby confirm
that I do not have any relevant interest in, or any interest in
the acquisition or disposal of, JPY and/or USD.
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