YEN on a knife's edge. Is the big one around the corner?

The global carry trade makes the JPY a good indicator of risk sentiment. When things start to go south you'll see the global carry trade unwind as traders sell USD and buy JPY. Looking at the chart you can see that risk off environments are often punctuated by spikes lower in USD/JPY as there were lately in Oct and Nov. However zooming out and looking at a longer timeframe shows us that the YEN is finely balanced closing right on it's trend line. While I expect it to move lower in the long term as the equity bear market gains steam, for the moment it hasn't broken out and if it can manage to hold and even rally from here the implications would be short term positive for equities.

Commentaire:

USDJPY has since broken support and looks like there is a lot of fresh air below. Look to go long JPY against the USD as the general risk off sentiment continues.