Bernard L. Madoff

Got FOREX

875 posts in this topic

Japan has been in the crapper now for 2 decades. They have soaring deficits, an ageing population and 2 decades of QE/Zirp and are now entering a deflationary spiral.

There is no light at the end of Nipponese Tunnel.

S&P's Lowers Outlook for Japan's Debt Rating

Global credit rating firm Standard and Poor's lowered its outlook for Japan's long-term sovereign debt from "stable" to "negative" on Tuesday. The rating on long-term sovereign debt is often regarded as the baseline for a national credit rating, and the outlook shows which direction the rating will go if current trends continue. Standard and Poor's gives Japan an AA long-term and A-1+ short-term local and foreign currency sovereign credit ratings.

In a statement, the firm said the negative outlook reflects its view that the Japanese government's "diminishing economic policy flexibility may lead to a downgrade unless measures can be taken to stem fiscal and deflationary pressures." Japan's national debt was 864 trillion yen as of the end of September last year, and consumer prices fell for nine months until November.

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Yen and USD Carry trade unwinds.

USD:

http://www.telegraph...stening-to.html

Zhu Min has just warned Davos of another inconvenience raised by Economic Agenda in September: the potential unwinding of the "dollar carry trade". America's "near-zero" interest rate response to sub-prime has seen traders borrow in dollars, then re-invest this cheap money in high-yielding non-dollar assets. The trouble is that when the US currency strengthens, carry-traders' dollar debts rise while the value of their non-dollar investments plummet. Against a basket of six major currencies, the dollar is now at five-month high.

The size of the carry-trade is estimated at $1,500bn (£939bn). This is far bigger than the yen carry trade of the late 1990s, the unwinding of which sent financial shockwaves around the world. "The big risk in 2010 is the dollar carry-trade," said Zhu Min on Thursday. "It's a massive issue."

YEN:

http://www.dailyfx.c...to_Gain_as.html

The Japanese Yen is likely to rise for the fifth consecutive week as increasingly acute risk aversion continues to translate into a rush out of carry trade positions funded in the low-yielding currency. It has become quite clear that the path of least resistance for the spectrum of higher-risk investments leads lower. The markets’ response to Friday’s unquestionably impressive US GDP result for the fourth quarter is quite telling as both equities and commodities continues to slide. Indeed, S&P 500 yielded the first three-week losing streak since July and the biggest monthly drop since February of last year. Meanwhile, a UBS/Bloomberg gauge of commodities’ performance capped the largest 5-day loss since the first week of September 2009 and the worst monthly drawdown in over a year.

Such blood-letting bodes ill for carry trades, a good bit of which are funded with capital borrowed cheaply in Yen. Indeed, a Deutsche Bank index tracking G10 FX carry trade returns has a near-term correlation reading of 0.97 with the MSCI World Stock index and 0.88 with the aforementioned commodities benchmark. As traders exit carry trades along with bets on other risky assets, they must buy back Yen to repay the borrowed capital used to established the positions, sending the Japanese unit broadly higher.

http://www.forexhound.com/article/Technicals/Daily_Reports/Daily_Forex_Overview/179501

Earlier, once again Asian bourses fell sharply. Their declines were led by concerns about expectations for future policy tightening in China. The Nikkei also fell on worry about reduced demand for exports from that region. An unwinding of equity holdings can lead to demand for the JPY as carry trade financings are paid off.

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Japan has been in the crapper now for 2 decades. They have soaring deficits, an ageing population and 2 decades of QE/Zirp and are now entering a deflationary spiral.

There is no light at the end of Nipponese Tunnel.

+1. I expect for their stock market to be reduced to 10-15% of its peak before it finally bottoms.

post-148-12649122162011_thumb.jpg

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I am still trying to get my head around the Yen strength, apart from carry trade covering. However, I thought most of the covering took place during Q4 2008.

Who or what is persistently buying Yen? Or not selling Yen?

you get an answer from the fundamentals in their current account number (look at data from the other thread), as japan run a surplus for the last 30 years eventually those money come back into japan, this usually happen in trouble times where japanese investors see their overseas investment at risk

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you get an answer from the fundamentals in their current account number (look at data from the other thread), as japan run a surplus for the last 30 years eventually those money come back into japan, this usually happen in trouble times where japanese investors see their overseas investment at risk

Yes good point. However this has been going on for nearly 12 months now. If anything, I would expect Japanese domestics to use the strong currency to fund overseas asset purchases (except Gold Coast property...), but maybe they are circling wagons instead.

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Yes good point. However this has been going on for nearly 12 months now. If anything, I would expect Japanese domestics to use the strong currency to fund overseas asset purchases (except Gold Coast property...), but maybe they are circling wagons instead.

I don't have a great knowledge on japanese society but I don't think the JPY is that high as it has been hanging around 80 with the AU$ for very long time (it was 85 JPY for 1 aud in 1992), Japan also had inflation or cpi at zero for 20 years while australia was much higher then that.

Also the deflationary environment of Japan push people to save money and they don't have the culture of whatever they buy or invest in it will increase in price like it has been in australian society.

Finally a lot of money and saving end up in a black hole (deflation) in japan, the money it survive thew black hole mostly would end up in the forever increasing public debt and doesn't leave much for foreign investment. Also, the Japanese total debt (public+ private) is in a reducing pattern, In my opinion eventually the debt will get low enough to stop deflation and improve their economic situation.

I don't also see Japan at great risk just because I like to see the debt situation as a whole (private+public) and not just public like many economist and commentator point out. For example how many member of this forum know that Italian private debt+public debt is lower then Australia private+public when you compare it to gdp?

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Could be some nice 80-150 pip runs in the GBPYEN this week Boz.

Mr Volatility is on the couch.

today I finally sold my GBP/JPY shorts (around 143.55). On the gbp I only have it shorten against the euro (euro/gbp long at 0.868, just a amall position).

The best oppurtunity of the day was a short on MQG when it got around 51$.

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A drop below 0.8750 and all hell could break lose. It is almost like Australia perfects the habit of being a late arrival on anything.

AUDUSD is now below 0.8750. A storm is coming. Expect a landslide.

Edited by sydney3000

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EURUSD now really oversold. Just went in an initial small long looking for a pull up to the trendline.

now is at around 1.374 at resistance (and at FIB point).

If it holds there a bit I might try a small long.

I'm loving this bear market for forex trading.

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I assume it is not beyond the realms of possibility that if .8750 was a major support that we could see the life sucked out of the Aussie battler. In that scenario, what currency/currencies will you (all) be long in while it falls?

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now is at around 1.374 at resistance (and at FIB point).

If it holds there a bit I might try a small long.

I'm loving this bear market for forex trading.

She took some hammer last night. Monty Pthonesque, its gone from oversold to really, really, really oversold.

Screw the techs, EVERY currency took hammer as Wall St melted and cash flew inyo YEN and USD.

I gave up a week of gains in 5 hours whilst I slept and that was just a mini trade. Bit like a house really, I only lose when I sell at these low prices. :laugh:

Hovering near my stop tho :fear:

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I assume it is not beyond the realms of possibility that if .8750 was a major support that we could see the life sucked out of the Aussie battler. In that scenario, what currency/currencies will you (all) be long in while it falls?

The only currencies that rallied last night were YEN and USD.

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wonder how the swiss central bank stepped in few minutes ago?

post-268-12653402468922_thumb.png

(that is from 2 p.m. AUS eastern time)

they must lose heaps of money when they do that, or better say traders love banks stepping in (they don't care too much about losing money as they print them at their wish...).

now it is back to 1.474

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now is at around 1.374 at resistance (and at FIB point).

If it holds there a bit I might try a small long.

I'm loving this bear market for forex trading.

I had 1.3800 as the 50% Fib retracement of March Lows to Dec Highs.

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I had 1.3800 as the 50% Fib retracement of March Lows to Dec Highs.

had a look around for a good TA on the euro.

this is the one I like most (very recent).

lately US market futures have turned negative together with commodity and gold, bond futures up (yield down)

AU$ is losing against the euro but it is probably because the euro is on support at the lows of the day.

Swiss Francs back below 1.47, I'll expect a new Swiss bank buying frenzy, I'll see if I can buy the euro at around 1.466

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COT

Have a look at the Right Column (Commercial). The Commercials are net short the USD and the AUD, Long the EUR.

http://www.forexrazo...of-Traders.aspx

Yes, i always check the COT, in the last few weeks there has been significants changes.

I usually found interesting the volumes and where the speculators are positioned.

It is quite clear that commodity currency potentially have a lot more to unwind and a bottom picking is risky, may be less risky a bottom picking on the euro or GBP. wonder if 139.2 is a good buy on the GBP/JPY...or may be a 121 on the Eur/JPY (I had a limit buy on this just over 121 but seems I missed the train)

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Yes, i always check the COT, in the last few weeks there has been significants changes.

I usually found interesting the volumes and where the speculators are positioned.

It is quite clear that commodity currency potentially have a lot more to unwind and a bottom picking is risky, may be less risky a bottom picking on the euro or GBP. wonder if 139.2 is a good buy on the GBP/JPY...or may be a 121 on the Eur/JPY (I had a limit buy on this just over 121 but seems I missed the train)

I had a 138.5 BuyLimit on the GBPYEN and she hit on Friday, shat my pants that she may sail on by (was at work and laptop at home with trading platform). Might watch this closely .

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