- In the currency markets, one of the main themes has been shorting the Japanese yen and we continue to see that happen around the world.
- Even the lowly Swiss franc is manhandling the Japanese yen as the Bank of Japan is stuck with its current monetary policy.
- After all, if they start raising rates, there becomes a real question as to whether or not Japan can actually pay its debts. (Here’s a hint: almost no developed country can now pay its debts, but Japan is by far the worst.)
Buying on the Dips
This is a market that I continue to buy on the dips, and I do think that we continue to see a lot of upward pressure. We are well past where the Bank of Japan intervened in most currency pairs, and I think the fact that you get paid swap at the end of every day, even with the lowly Swiss franc, suggest that we will continue to short the Japanese yen under almost all circumstances.
Underneath, we have a lot of support near the ¥178 level, and then again at the ¥175 level. The 50-Day EMA sits near the ¥174 level and is rising quite rapidly. We had just been a couple of days going sideways, and therefore it looks as if we work off a little bit of froth. Whether or not we can continue to rise remains to be seen, but I certainly would not be short of this market.
Top Regulated Brokers
I do believe that eventually we will go looking to the ¥180 level, which of course is a large, round, psychologically significant figure, but I think we not only reach that level, but probably reach much higher levels than that. The Bank of Japan is essentially stuck, and therefore there is only so much they can do. They may occasionally intervene in the currency markets, but that will just be a speedbump along the way. Not only will the CHF/JPY pair continue rising, but anything else yen denominated.
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