Posts Tagged ‘ yen ’

First the Japanese Yen and then Gold – There is No Safe Haven Currency Panacea

March 1, 2012
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First the Japanese Yen and then Gold – There is No Safe Haven Currency Panacea

Beware of the one-way, one-speed runaway train! Usually in the normal chain of events the train stops, lets the passengers off, turns around, and starts going the other way. In a rare circumstance, all hell breaks loose and the train can’t be turned around and runs off the track and over the cliff. In the investment world it is rare to find this type of “accelerating in your favor (or against you)” investment theme. Two recent moves highlight how risks can be largest in the most comfortable havens. In less than a month, the seemingly invincible Yen has sold off from 76 to 81 (the USD dollar now buys 5 more) which is a 6.6% move, and a very large one-month move for the currency market. Not to be...

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Yen Intervention Take Three – Reminder That There Are No Safe Haven Currencies

October 31, 2011
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Yen Intervention Take Three – Reminder That There Are No Safe Haven Currencies

Japanese leaders intervened for the third time this year as JPY strength below 77 yen/usd is clearly constraining a recovery in the world’s third largest economy. Japanese Finance Minister, Jun Azumi, announced a unilateral move with an additional pledge to keep selling in the future. The action took place because Japan believes the yen strength broke from normal economic fundamentals and linkages. Japan’s leaders are right. In the recent couple of months, the US economy has been the most resilient of the developed market major economic zones. Normally when the US economic growth rate picks up relative to other nations, the dollar strengthens. The FX flows related to the fear of a financial crisis in Europe have thrown a lot of normal relationships out of whack. The Yen has...

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Ohayou Gozaimasu! Moody’s Downgrades Japan

August 24, 2011
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Moody’s came out today and downgraded Japan’s Sovereign Credit Rating from Aa2 to Aa3 based on the size of its deficit and large buildup of government debt. As a result of this downgrade, a number of Japanese banks and insurance companies will be downgraded by Moody’s as well. This news will make much less of a splash than the US Sovereign Credit rating cut from S&P earlier this month because Moody’s is the third of the three credit rating agencies to downgrade Japan. Moreover, the markets are largely unconcerned with this downgrade as the JGB market still has the lowest yields in the world at 1.01% for 10-YR borrowing rates. Really what the market is saying, is that despite Japan’s large accumulation of debt, there is no visibility for...

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