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USDJPY USD/JPY
US Dollar to Japanese Yen
US Dollar to Japanese Yen
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Another wave of the US Dollar's weakness is gaining momentum. The Yen looked undervalued due to a still high degree of scepticism about the possible changing of the policy of the Bank of the Japan, which used to be extremely loose for more than 25 years. Now, when the situation became slightly different after the governor Mr Ueda at least decided to discuss hypothetical tightening options, the USD/JPY got a historical chance to follow the mainstream move on the Forex market. Asia Pacific currencies, including Aussie and Kiwi, re-establish their record prices since July against the Greenback. South ocean currencies were muddling around compared to the Pound Sterling, the Euro or the Swiss Franc, when most traders openly preferred U.S. Dollar fast selling in favour of its rivals to follow the Federal Reserve's rate cut projections on December 13. This week began with a short retreat in this trending move even in case of European currencies. However, the entire basket of non-Dollar currencies is rapidly strengthening. So, I would expect the USD/JPY to finally join the party, as it has enough space from current levels still above 143.50 to test the area between 141 and 142 where it already fell last Thursday. When selling the USD/JPY, I personally put my stop loss levels to 145.00 (just above today's intraday high), which gives me a nearly 2:1 profit/risk ratio.
US Dollar to Japanese Yen
- The Yen is a safe haven asset during economic turbulence or raging political risks. It is a desired shelter during Banking or energy crisis, stock market crashes, etc. During such periods, the currency receives additional growth drivers. In this case USD/JPY, EUR/JPY, GBP/GPY are pushed down. Such downside movements are usually very strong if accompanied by negative news;
- During positive market sentiment and rising risk appetite, the demand for the Yen is lower and USD/JPY rises;
- As a safe-haven asset, the Yen’s movements are tracked via risk tolerance indicators. The USD/JPY is very sensitive to the change of S&P 500 broad market index. The pair has a negative correlation to the index. The pair has a positive correlation with the CBOE Volatility Index, simply known as the VIX Index. The latter could serve as an indication of the likely direction of the USD/JPY;
- The Yen is one of the most popular currencies for carry trade. This is a process of borrowing at low interest rates, which are one the lowest in Japan, and investing in assets with higher rates of return;
- The Yen is heavily dependent on the Bank of Japan’s (BoJ) actions. Japan is an export-driven country, and a weaker Yen is vital for the country to get export advantages. So, the BoJ is prone to a weaker Yen and tries to avoid unnecessary strengthening of the currency even during strong demand for it. The BoJ is also known for its unexpected market interventions, when it throws large Yen liquidity in the market to dump the Yen exchange rate;
- The BoJ is also known as a protagonist of ultra-low or even negative interest rates and an ultra-loose monetary policy. It keeps the policy stable for decades to stimulate domestic economic growth. Such a monetary stance supports the weakness of the Yen. However, it may change at some point after the new BoJ governor steps in. Although the new governor is seen to be prone to continuing the ultra-loose monetary policy, his rhetoric and the BoJ’s actions should be carefully monitored;
- Currency pairs with the Yen, like USD/JPY, are volatile mostly during night hours for Europe, or during the Asian trading session hours.
Ticker | USDJPY USD/JPY |
Contract value | 100000 USD |
Maximum leverage | 1:500 |
Date | Short Swap (pips) | Long Swap (pips) | No data |
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Minimum transaction volume | 0.01 lot |
Maximum transaction volume | 70 lots |
Hedging margin | 50% |
USD Exposure | Max Leverage Applied | Floating Margin |
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