Dollar Yen Breaks 2 year down trend

January 25, 2012


The USD is on the march – well at least against the Yen. Now I wouldn’t exactly call it a full gallop yet but as you can see in the chart below the USD/JPY rate has over the past 24 hours broken a very long-term down trend.

As well it might I guess given the recent trade data for 2011. As the Wall Street Journal reported overnight

For decades, Japan used the combination of manufacturing might and an export-oriented trade policy to shower markets around the world with its cars and consumer electronics and semiconductors.

No longer.

The Japanese government is expected to announce Wednesday that the country recorded its first annual trade deficit since 1980. If the yen remains strong and global demand weak, economists warn that Japan could run trade deficits for years to come.

Now we know that currencies have become the stealth weapons of choice for many countries around the world as they try to climb out of the economic doldrums. Japan however has had to endure a strong currency which on top of natural disasters and supply disruptions has put the economy under even more pressure.

So a move higher in USD/JPY would be beneficial for the economy but also natural given its current and prospective settings.

Please remember these are not recommendations for you to trade these are my views and I have my risk management tools and risk parameters that you do not have access to. Thus, this blog is for information only and does not constitute advice. Neither Greg McKenna nor Lighthouse Securities has taken your personal circumstances, objectives or financial situation into account. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation

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  1. Dollar Yen Pierces Long-Term Downtrend Line | Global Macro Monitor - January 25, 2012

    […] friends over at Lighthouse Securities posted a nice chart and great analysis on today’s $/Yen’s break of its two-year […]

  2. The rise and rise of the Australian Dollar | Lighthouse Securities - February 18, 2012

    […] 1.30 and the Yen recently retouched multi decade highs against the Dollar. Luckily for Japan as I wrote a few weeks back the worm is turning for the Yen – but a liberal dose of monetary stimulus this week from the […]

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