- I felt compelled to write something about the current huge huge surge in the USDJPY even though I already highlighted the rationale for an upward move in some of my previous posts - and forecasting a move to up to 97 this week
- and also because it seems this is the only major ccy pair making all the headlines today
- the current spot price now is 96.73. low of this week is about 92.8
- we're seeing very bad trade data (trade deficit) for Japan. the country's imports are likely to exceed exports by a big margin and has been widening at an astonishing pace since last quarter due to the exports crash
- the Japanese are actually pulling their money out of local assets to invest in foreign assets, deteriorating the portfolio account in the country's basic balance
- Japanese corporates were caught cold by the exports crash and will not buy JPY for hedging in anticipation that receipts will be severely affected. in fact they do not know how to forecast future earnings in this environment!
- these factors point to a drastic drop in demand for the JPY, hence the massive USDJPY upward move
- Goldman Sachs, as usual, rode on the bandwagon of a big market move and came out to say that USDJPY will hit 102 or something like that. (remember the oil forecast of UD200/barrel?)
- and also because it seems this is the only major ccy pair making all the headlines today
- the current spot price now is 96.73. low of this week is about 92.8
- we're seeing very bad trade data (trade deficit) for Japan. the country's imports are likely to exceed exports by a big margin and has been widening at an astonishing pace since last quarter due to the exports crash
- the Japanese are actually pulling their money out of local assets to invest in foreign assets, deteriorating the portfolio account in the country's basic balance
- Japanese corporates were caught cold by the exports crash and will not buy JPY for hedging in anticipation that receipts will be severely affected. in fact they do not know how to forecast future earnings in this environment!
- these factors point to a drastic drop in demand for the JPY, hence the massive USDJPY upward move
- Goldman Sachs, as usual, rode on the bandwagon of a big market move and came out to say that USDJPY will hit 102 or something like that. (remember the oil forecast of UD200/barrel?)
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