¥en’s Up

In 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 importantly the $US/¥ cross-rate, it’s now.”

At the time the cross rate was 112.5 with four charts outlining the close correlation of the $US/¥ against the Nikkei Dow & S&P 500 stock-indices, the US 10-year Treasury Bond Yield and the $Gold price, with the latter inverted to better show the relationship, going on to conclude the following:-

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.

So, six trading weeks later, what’s the score?

  • The $US/Yen has strengthened from 112.5 to 109.
  • The Nikkei Dow is lower by 4.5%.
  • The S&P 500 has fallen by a more modest 0.8%.
  • The 10-year US Treasury Yield is lower by 1.3%.
  • $Gold is higher by $30 or 2.4%, at $1285oz.

So that’s a “royal flush” in that all four correlations are holding up, very satisfying to a market technician.

However, there are wider implications to the ¥en strength or otherwise, particularly in respect of market liquidity, which will be discussed within a future “knowledge share.”

In the meantime you may wish to look closer at our $/¥ currency-timing service, as it could be important to you wealth.

 

 

 

 

 

 

 

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One response to this post.

  1. […] the yen has been strengthening thereby ill-liquidity and capital loss if unwound. Our latest “knowledge share, Yen’s Up” expands on this, with the implications for various asset classes. Meanwhile it is interesting to […]

    Reply

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