What's up with the value of the YEN?

[kurogane]

Okay, I am confused again. The BoJ announces its latest sleight of hand which apparently whacked the CAD for unknown reasons unknown (as in a known unknown not yet known), and then the CAD rose against the yen, going from 80~ last week to 86~~ just yesterday and today.

Which means, go the Jpn PO and withdraw CAD. That much I get.

[wagyl]

Okay, I am confused again. The BoJ announces its latest sleight of hand which apparently whacked the CAD for unknown reasons unknown (as in a known unknown not yet known), and then the CAD rose against the yen, going from 80~ last week to 86~~ just yesterday and today.

Which means, go the Jpn PO and withdraw CAD. That much I get.

It only means "withdraw!!!!" if you think the value is going to change in the future in a way which is adverse to your position. Past results are no indication of future results. And if you can read the future, you don't need to worry about foreign exchange movements.

[kurogane]

Hehehe. That would make a great disclaimer for a snake oil investment scheme advert.

I lost a whole $42 on a $1000 the last time I withdrew too soon, but when I get down about it I remember how much it has cost our MIA member IPU for not withdrawing soon enough. And then I feel better.

[FG Lurker]

Okay, I am confused again. The BoJ announces its latest sleight of hand which apparently whacked the CAD for unknown reasons unknown (as in a known unknown not yet known), and then the CAD rose against the yen, going from 80~ last week to 86~~ just yesterday and today.

Which means, go the Jpn PO and withdraw CAD. That much I get.

In recent months the CAD has been heavily impacted by the price of oil. Oil has rebounded somewhat in recent days which has resulted in the CAD gaining some strength against other currencies.

The BOJ announcement yesterday also weakened the JPY against other currencies. Combine the two together and it resulted in a decent move on the JPYCAD rate.

That's my thoughts on the matter, anyway.

[kurogane]

Aha!!!!!!!! It's all about The Gasoline!!!!!! That makes good sense. The article I read claimed that the BoJ move weakened the CAD. Which seemed weird, given what you just said, and the fact that it, well, didn't weaken against the yen, but actually strengthened. But what you said makes good sense. Apparently we're also out of the recession hole, because the Cdn economy grew by 0.3%. Whoopdeedoo!!!!!!!

[matsuki]

but when I get down about it I remember how much it has cost our MIA member IPU for not withdrawing soon enough. And then I feel better.

[Samurai_Jerk]

Yen Bulls Burned After BOJ's Surprise Spurs Biggest Rout in Year

Yen speculators got burned again by Bank of Japan Governor Haruhiko Kuroda.

The currency held losses against most of its major peers and bond yields dropped to fresh records on Monday after Kuroda unexpectedly announced a negative interest-rate strategy on Friday, setting off the yen’s biggest drop against the dollar since October 2014. The move hammered hedge funds and other large speculators that had built up the most bullish yen position in almost four years as a rout in global stocks spurred demand for havens. Australia’s dollar weakened after China’s official purchasing managers index dropped to a three-year low.

“The BOJ decision will have a lasting negative impact on yen because speculative positioning was the wrong way and Kuroda’s battle to reach agreement on negative rates raises the risks of further action in months to come,” said Sean Callow, a foreign-exchange strategist in Sydney at Westpac Banking Corp. “Negative rates in Japan are a bigger deal than any given month’s China PMIs.”

[wagyl]

I really do wish that these financial journalists reined in their superlatives. Shock! Horror! The USD JPY rate is back to the same it was six weeks ago!!!!

Sure, if you are a monster hedge fund manager making megatransactions and then reversing them 5 milliseconds later, this may mean that you get one less Lamborghini from this week's bonus payment, but that kind of manipulative gambling should not be what mainstream reports are built around. We are talking a reversion to six weeks ago. You probably haven't even paid for your credit card purchases from back then. Let's have some balance.

[kurogane]

Good rant

PS and thanks for the credit card payment reminder

[Wage Slave]

Yes. Spot on.

[FG Lurker]

It actually is a fairly big deal. There has been a lot of expectation that recent economic uncertainty/volatility would lead to a stronger yen, as has consistently been the case over the past 7 or 8 years. It has been such a consistent thing that it's become nearly automatic, and as such there were a lot of large institutional investors who were long JPY when the negative rate announcement came out. I don't know if part of Kuroda's goal was to fuck over speculators aiming for a stronger yen but it will likely create some caution in currency markets, a stronger JPY is no longer a sure thing when everything else is going to shit.

There is also some speculation now that this is just the first move into negative rates for the BOJ and that Kuroda may push for more depending on how 2016 unfolds.

[Wage Slave]

Naughty BoJ for not falling into line with what institutional investors had decided was their plan for the value of the Yen.

I never, given Japan's obvious fiscal weaknesses, understood why Yen holdings were seen as a safe haven. If the interest rate does go negative more broadly, then that will put the final kibosh on that notion.

[kurogane]

Naughty BoJ .......

Exactically. I have no doubt that the SJW's of the finance world will be up in arms and ready to march on whatever their version is of Selma to protest this unspeakable assault on their unidirectional speculative profits. I would go along for a laugh but I have to go to the PO and withdraw some Cdn while the getting is good.

BTW, Fg L, I get what you are saying, but do you actually think such scumbags, errrr, sorry.....Investors, have anything to complain about, or are you just outlining the significance of the development? For your reference, I sincerely think most of those speculative finance pigfuckers should be brought out in stocks and chains and horsewhipped with cowpiss soaked pool noodles. Just because they qualify as people doesn't mean they aren't economically worthless parasites. The individual FX trader types can be scoially annoying, but the scale is so limited it's almost a real job. Hedge fund managers need to be drive hunted and beaten, or at least soiled with something noxious.

[wagyl]

It actually is a fairly big deal. There has been a lot of expectation that recent economic uncertainty/volatility would lead to a stronger yen, as has consistently been the case over the past 7 or 8 years. It has been such a consistent thing that it's become nearly automatic, and as such there were a lot of large institutional investors who were long JPY when the negative rate announcement came out. I don't know if part of Kuroda's goal was to fuck over speculators aiming for a stronger yen but it will likely create some caution in currency markets, a stronger JPY is no longer a sure thing when everything else is going to shit.

There is also some speculation now that this is just the first move into negative rates for the BOJ and that Kuroda may push for more depending on how 2016 unfolds.

But is it really such a big deal?
As further evidence, the market seems to have stabilised at a rate current six weeks ago, and about average for the last year, if not maybe higher.

[FG Lurker]

BTW, Fg L, I get what you are saying, but do you actually think such scumbags, errrr, sorry.....Investors, have anything to complain about, or are you just outlining the significance of the development?

Just outlining my understanding of the development. I'm not an expert (or much of an investor these days) but the USDJPY rates are important for my business so I try to stay aware of what is going on.

[FG Lurker]

Naughty BoJ for not falling into line with what institutional investors had decided was their plan for the value of the Yen.

It wasn't an unreasonable conclusion to make. Economic turmoil and yen strength have correlated pretty tightly since 2008.

I never, given Japan's obvious fiscal weaknesses, understood why Yen holdings were seen as a safe haven. If the interest rate does go negative more broadly, then that will put the final kibosh on that notion.

My understanding is that a lot of the reason for the "safe haven" status is that Japan has a large trade surplus -- more money comes in than goes out every month. Post-2008 a big part of the yen's "strength" was actually the weakness of other currencies. The EUR, GBP, and USD were all slammed very hard by the economic problems in those areas. In contrast the JPY wasn't as heavily impacted and therefore ended up gaining strength. It's far more complicated of course and I certainly don't claim to understand the currency markets at more than a superficial level. In fact I'm in agreement that the JPY doesn't seem that it should be viewed as a particularly safe currency given the state of Japan's finances. Again though, maybe compared to how fucked up everywhere else is it's not so bad...

[kurogane]

Gotcha. A good summary, anyways. I live on CAD while here these days to avoid any suspicion of working while here, so I do like to keep abreast and withdraw a larger amount whenever it turns better for me. Hence my love of a cheap yen, though I suppose those who bet short or cheap are liking it too.

[Wage Slave]

My understanding is that a lot of the reason for the "safe haven" status is that Japan has a large trade surplus -- more money comes in than goes out every month.

It's a crapshoot driven by speculators as far as I can see.

Between 1980 and 2010 Japan recorded a trade surplus every year. But since the Fukushima nuclear disaster in March 2011, imports have surged due to the weakening of the Japanese yen and increased purchases of fossil fuels and gas. As a result in 2014 trade deficit was the worst on record. In 2014, the biggest trade surpluses were recorded with: United States, Hong Kong, South Korea, Taiwan and Singapore. The biggest trade deficits were recorded with: China, Saudi Arabia, Australia, United Arab Emirates, Russia and Malaysia. This page provides - Japan Balance of Trade - actual values, historical data, forecast, chart, statistics, economic calendar and news. Japan Balance of Trade - actual data, historical chart and calendar of releases - was last updated on February of 2016.

http://www.tradingeconomics.com/japan/balance-of-trade

[legion]

Naughty BoJ for not falling into line with what institutional investors had decided was their plan for the value of the Yen.

I never, given Japan's obvious fiscal weaknesses, understood why Yen holdings were seen as a safe haven. If the interest rate does go negative more broadly, then that will put the final kibosh on that notion.

Mr Kuroda likes to fuck with traders, off mic he's like

"Who's your daddy, who's your daaaaaaaaaaaaaaaaaaaaaaddddddddy"

One of the guys I work with was crying in his afternoon coffee because he got his face ripped off on Forex because of Kuroda, I guess I didn't help his misery by telling him Forex is a sucker's game. It's far too complex, and made the harder by the actions of people like Kuroda, who deliberately throw curve balls, a week before the rise he said he wasn't considering negative rates. I like to think he does this because he is tired of people making money out of "positions" which are really just a drain on the economy.

[Wage Slave]

Thinking about it a bit more what the BoJ did last week was perhaps very significant for the price of the Yen in a broader sense. Suppose that an important reason the Yen has been seen as a safe haven is that the perception has been that the bond market and other aspects of the financial system are somewhat insulated from the turbulent international markets. This is because the domestic banks and other financial institutions work in close concert with the BoJ, doing exactly as they are told to do, in exchange for favoured treatment.

What happened last week was a break in all that. The BoJ was not happy with the banks and others betting on the Yen appreciating again. Presumably they sent signals/made requests but they were ignored and so the BoJ sprang a little surprise on them. Will the banks capitulate and kiss and make up? Or has the pot been broken? Trust is a tricky thing to recover.

[kurogane]

Trust is a tricky thing to recover.

Very nice points and analysis, but taking it one way, it strikes me how weird the world has become when the Mother of All Banks is in a position where it is even suggested they need to "regain trust" from the clientele they are charged to regulate (whether you meant it that way or not). Assuming they are operating legally, diligently and according to their estimation of the nation's best interests, this reminds me of that poem by that Milton guy where one quite senior underling decided he shouldn't have to obey his boss because he thought he was equally snazzy and clever. Other than a really good Peter Cook & Dudley Moore movie that didn't work out very well, if I recall.

[Wage Slave]

Trust is a tricky thing to recover.

Very nice points and analysis, but taking it one way, it strikes me how weird the world has become when the Mother of All Banks is in a position where it is even suggested they need to "regain trust" from the clientele they are charged to regulate (whether you meant it that way or not). Assuming they are operating legally, diligently and according to their estimation of the nation's best interests, this reminds me of that poem by that Milton guy where one quite senior underling decided he shouldn't have to obey his boss because he thought he was equally snazzy and clever. Other than a really good Peter Cook & Dudley Moore movie that didn't work out very well, if I recall.

Indeed. But the power anyone, even central banks, have over markets these days is limited. If the agreement breaks up and Japanese banks follow their commercial instincts like they do everywhere else then there will be some big changes. Not least the BoJ might find it hard to get willing buyers of J Gov 10 year debt at 1% or whatever they have set the price at. Just not being able to set the price they want will come as a huge shock to the system and if the price goes up, which would seem inevitable, then already shaky finances will .......Anyway it could be Greece time for Japan.

But perhaps that could be cathartic. I've felt for a while that real reform will only come when there is a full scale shoganai moment. A cap in hand trip to the IMF might well be the tonic that revives.

[kurogane]

　　I've felt for a while that real reform will only come when there is a full scale shoganai moment. A cap in hand trip to the IMF might well be the tonic that revives.

Kicking and screaming as I will I have been dragged that way lately too. The inertia of tolerable quiet desperation has become so strong and comforting they probably need a small fall from a steep cliff to get things working properly. With the proviso that we both know which madness that way lies



And a fun bonus:
http://www.telegraph.co.uk/culture/thea ... gging.html
Subsidised theatre gives Baroness Thatcher another handbagging
A new work at the subsidised Crucible theatre in Sheffield portrays the late Baroness Thatcher as being the mother of Satan

[Wage Slave]

Yep. Precisely. A powerful youth protest and an economic collapse did produce reform and an end to hanging on in quiet desperation when there was no future in England's dreaming. But the way it happened in the UK was no model for anyone to follow. Far more painful, brutal and destructive than necessary and in the hands of some right perverts for a long time. And the scars are still there and they run deep. However, it is a far more ambitious country and there is far more opportunity for a lot (but not enough obviously) of people. Large swathes of the country actually look well off now and London looks positively rolling in it. I almost have to pinch myself when I visit central London now. It is really rocking - and in the side streets too.

But yeah - It was and is far from painless, far from just and far from smooth. And there are losers without question - it's just there are more winners and more opportunities now. And something like a viable future - I would take some persuading that isn't the case and it wasn't the case in about 1976.

[wagyl]

Other than a really good Peter Cook & Dudley Moore movie that didn't work out very well, if I recall.

It was a shit load better than the Liz Hurley Brendan Fraser version.

Oh... that's not what you meant....

[FG Lurker]

Two points:

1. Japan won't (can't, really) default as Japanese debt is JPY-denominated and there is nothing stopping Japan from printing at will. There could/would be hyperinflation (which would make the debt worthless, thus "solving" the problem) but default can't happen.

2. The IMF doesn't have enough money to help an economy the size of Japan's. They can bail out developing countries (like Korea when it happened) but not a developed 1st world economy.

[Wage Slave]

Yep, but if the debt and Yen are worthless via hyperinflation, or on the way to it, it will still mean a trip to the IMF for emergency loans. There won't be any way to buy oil/gas and other essential imports otherwise. Hopefully someone would, if it comes to it, grasp the nettle and make that trip before there is a complete collapse. A favorite management tactic is to engineer a real but not that serious a crisis before the real crunch and then use that to say to everyone there really isn't any choice now, the time for discussion is past, time to get on with it ....etc

Whether or not the IMF has or could muster the firepower needed is another question. Depending on how deep the crisis really is the The US, The EU and China working together could conceivably manage it. Or not? I'll grant it may well be a very close run thing though, for any number of reasons. If they can't or won't then life would get very uncomfortable and unpleasant indeed in Japan for quite a long time.

On the plus side Japan has a good record when it comes to quickly digging themselves out of a very deep economic hole provided they get the necessary minimum support to do the job.

[legion]

Japan doesn't have any natural resources for the IMF cronies to loot, there would be no bailout.

[kurogane]

And something like a viable future - I would take some persuading that isn't the case and it wasn't the case in about 1976.

Given that it's just me anyways: yes, well put, and I accuse you of historical fatalism. Even the Manx himself wrote:

Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like a nightmare on the brains of the living.

And even he who wrote the Iron Law of History was prone to not buy it too much, as seen above. The worst legacy of Her is the popular acceptance that She and what She did was inevitable. And as you noted, it wasn't, it shouldn't have been, and that is why her grave should be a urinal. I hope she feels the bugs eating her brain, and those munching at Reagan too. Death is too easy for some, and God is too forgiving for that ilk. Just because Germany is now a nice country doesn't mean they're not a bunch of fucking Jew killers that should have been exterminated.

But I am not naive enough to suggest the people will vote for much less than the same should it happen in Japan.

[FG Lurker]

Japan has over 1.2 trillion USD in foreign exchange reserves that could be used to finance a post-hyperinflation recovery. The IMF might step in to "restore economic order" or something similar but they would have trouble bailing out Spain, much less Japan.