¥en, a Desire to Watch Closely

Yen…defined in a dictionary as either the “monetary unit of Japan,” OR “a strong desire or inclination; a yearning or craving.”

The truth, of course, is that it means both and if ever there is a time to keep a very close eye on the ¥en, or more importantly the $US/¥ cross-rate, it’s now.

Why?

As always, a picture tells a thousand words, and here are four of them:

24-february-17-blog

Common to all four is that the $US/¥ is shown in black, with its current value, 112.5 shown on the right-hand scale, with other investment mediums shown as follows:

 

  • Top left:        $Gold inverted to better show its negative correlation.
  • Top right:      US Treasury 10-Year Bond Yield.
  • Lower left:    Japan Nikkei Dow 225 stock-index.
  • Lower right:  US S&P 500 stock-index.

Bottom line is:

Stronger ¥en, say to $US/Yen 110 or below = higher $gold price, lower treasury yield and lower US and Japanese stock indices.

Weaker ¥en,  say to $US/Yen 114 or above = lower $gold price, higher treasury yield and higher US and Japanese stock indices.

The April 2016 overview, “A Yen for a Crash” made the following observation:

The “talking heads” on the business TV channels’ are apoplectic today in respect of the Japanese Yen strength, struggling to explain why it is happening, when Abe-nomics suggests otherwise, and what does it mean for Japanese stocks, commodities, the carry-trade and the wider-world in general.

Nearly twelve months on and it’s no different, the “talking heads” on the business TV channels’ are still confused whilst the policy-makers in charge of the asylum (read central banks) still delude themselves that they control market forces.

But you dear reader have a very cost-effective helping hand, which you can find here

 

 

 

 

 

 

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One response to this post.

  1. […] the late February overview, “¥en, a Desire to Watch Closely,” the message was “if ever there is a time to keep a very close eye on the ¥en, or more […]

    Reply

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