Back
20 Sep 2013
Yen main loser as 'carry trade' back on
FXstreet.com (Barcelona) - The Japanese Yen has been a falling knife this Thursday, as investors and traders around the globe readjust their positions away from 'risk-off' assets to instead focus on 'carry trade' plays.
As Adam Button, Lead US Editor at Forexlive, notes: "The move is all about the carry trade. Fears of the taper sparked a ‘risk off’ rout in emerging market currencies and stocks. Some of it eased in the past two weeks but there was still major money parked in safe havens expecting a flight to safety on a taper."
Headlines out of Japan encouraged further Yen selling on Europe, only to enjoy some steady follow through along US hours. The BOJ Governor Mr. Kuroda addressed the Japanese Securities Dealers Association in Tokyo yesterday, noting "we will continue QE as long as deemed necessary for price stability."
Additionally, BOJ member Kiuchi, usually on the hawkish camp, said “I can’t deny the possibility that the BoJ will be influenced by external factors such as market expectations and will be forced to respond in such a way.”
The steady bids throughout the tree main sessions - Asia, Europe, US - in the past 24 hours, is suggestive of a market telegraphing that weakness in the Japanese Yen is here to stay under the new 'no taper' context. Some technical milestone were also achieved on EUR/JPY, CHF/JPY, which would only increase the appetite to play trend following strategies in those markets.
As Adam Button, Lead US Editor at Forexlive, notes: "The move is all about the carry trade. Fears of the taper sparked a ‘risk off’ rout in emerging market currencies and stocks. Some of it eased in the past two weeks but there was still major money parked in safe havens expecting a flight to safety on a taper."
Headlines out of Japan encouraged further Yen selling on Europe, only to enjoy some steady follow through along US hours. The BOJ Governor Mr. Kuroda addressed the Japanese Securities Dealers Association in Tokyo yesterday, noting "we will continue QE as long as deemed necessary for price stability."
Additionally, BOJ member Kiuchi, usually on the hawkish camp, said “I can’t deny the possibility that the BoJ will be influenced by external factors such as market expectations and will be forced to respond in such a way.”
The steady bids throughout the tree main sessions - Asia, Europe, US - in the past 24 hours, is suggestive of a market telegraphing that weakness in the Japanese Yen is here to stay under the new 'no taper' context. Some technical milestone were also achieved on EUR/JPY, CHF/JPY, which would only increase the appetite to play trend following strategies in those markets.