What's up with the value of the YEN?

[FG Lurker]

Oil price tanking -wanna make some money?
Low oil price -> US QE2 -> oil price and stocks ^
6 month time frame - 20% - not bad for a FG idiot.

Bought SLB and HAL not too long after you posted this. Had some BP and RIG from a few months earlier. RIG is only up slightly (~5%) but everything else is up 25% to 35%.

(Buying RIG was my own idea, I figured they'd recover more once the BP thing blew over. I have much left to learn.)

[Greji]

[SIZE="4"]WILL THE DOLLAR FALL?? [/SIZE]


I an posting this because I know you're interested in finance. As always the the Question of the Day is will the Dollar fall or not?



This timely demonstration now teaches us to remember, that the Key to true Financial Survival is to always be a Tight Ass!

[Russell]

Thanks, Greiji, for this major insight.
I think the answer to your question depends on the credit spread.

[AlbertSiegel]

Found this on the interweb today. What's your opinion Lurker?

The Japanese yen saw an extremely volatile trading session over the past week. The yen saw several ups and downs against its major rivals, yet it ended the week with sharp uptrends, including a 120 pips gain vs. the U.S. dollar, a 250 pips gain vs. the euro and a 270 pips gain against the British pound.

The yen's trading was impacted by two significant events. The first one was the Standard & Poor's unexpected decision to downgrade Japan's credit ratings from AA- to AA. The credit rating was lowered due to persistent deflation and as political gridlock undermined efforts to reduce an $11 trillion debt burden. The yen instantly slid against the major currencies following the announcement.

However by Friday, protests in Egypt began escalating, provoking concerns that a political turmoil might be impending. This has boosted risk-aversion in the market, spurring demand for safe-haven currencies, such as the Japanese yen.

Looking ahead to this week, several interesting economic releases are expected from the Japanese economy, yet at least for the near future, the political developments in the Middle East might have a larger impact on yen trading. Traders should take under consideration that if the unrest in the region will grow, the yen might strengthen further.


http://www.forexyard.com/en/market-analysis/jpy/yen_rallies_as_protests_in_egypt_spurs_demand_for_safe-haven_currencies-2011-01-31

[FG Lurker]

Anything is possible these days. The worry is that the unrest could spread from Egypt into oil producing countries where it might have an impact on the availability of oil. That's why we have seen oil prices spike as well.

If this calms down over the next week or so the yen and oil will probably return to where they were. If it gets worse then we could see oil shoot up more and the yen get stronger.

[Fullback]

The middle east has had unrest for thousands of years and people in the oil business are always looking for any excuse to raise the price based on, uh, anything.

The top ten oil producing countries are:
Saudi Arabia
Russia
USA
Iran
China
Canada
Mexico
UAE
Kuwait
Venezuela

Which countries are going to possibly be affected by the flavor of the day unrest in the middle east?
The Suez Canal is convenient, but it's not a required route for oil as breathless, fear-mongering reporters would love to see people in panic over.

[tone]

im a little late to this, but..

do you guys see any change in yen to dollar rate in the future?

if you were getting out of dollars and were presently living in the states - what would you invest in - property, gold, stocks, mutual funds

[FG Lurker]

do you guys see any change in yen to dollar rate in the future?

"The future" is a bit too vague a time frame.

On March 24th last year (2010) the yen was at about 90 to the dollar. In the following ~10 days it moved to 95yen/dollar, a huge movement for such a short period of time. Why? It moved because the market thought the US would raise interest rates later in 2010. This belief held on and off until the start of May. At that point the Fed made it clear that it had no intention of raising interest rates any time soon. The yen was back at 90/dollar within a couple of weeks and the rate fell steadily until it reached ~80.5 at the end of October. It has shuffled along between 80 and 85 since.

As inflation in the US starts to pick up and the US economy starts to improve we will see the meeting minutes from the Fed start to change in tone. Instead of saying they will keep rates near zero for an "extended period" they'll start to say something like how the current rate is appropriate for present conditions and that they will review it as conditions change. Then more discussion will happen about a moderate rate increase, followed by the rate increase itself. As soon as the discussion starts the yen will start to fall in value vs the dolar, probably back towards the 85~90 range rather than the 80~85 range it is in now. As the rate increase looks more certain the yen will lose more value.

When will this process start? Your guess is as good as mine. Later this year? Next year? Personally I don't think it will take several years like it did in Japan but who knows. Watch the inflation rate to get a feel for when it is likely to start.

if you were getting out of dollars and were presently living in the states - what would you invest in - property, gold, stocks, mutual funds

The answer to this question depends on how much money you have, how likely you are to need it soon (or suddenly), what risks you are comfortable with, and what your desired returns are.

[FG Lurker]

The middle east has had unrest for thousands of years and people in the oil business are always looking for any excuse to raise the price based on, uh, anything.

I didn't say it was logical, just that it was what seemed to be the thought processes.

What pisses me off is the gas stations in Japan immediately starting to raise prices and claiming it is because of the increase in the price of oil. It takes quite some time for crude price changes to actually reach the gas station level, and this is always reflected by the slow drop in prices when oil goes down. Somehow it doesn't seem to take any time at all for gas prices to jump though. Fuckers.

[Fullback]

I don't think the faster-than-a-speeding-bullet increases at the pump are a Japan only thing. You're right though, they are all quick on the draw.

I think you're more optimistic than I would be about "...and the US economy starts to improve..."

I think it's passed the point to be able to muster any long-range improvement trend. It's all downhill for the US and Japan.

China is less than a decade away from surpassing the US GDP and it's amazing to think that India will reach parity with the US GDP about the same time that China has reached double US GDP in just one generation from now.

I heard an interesting idea the other day that this is really the start of global economic democracy. A small percentage of the world population has traditionally controlled the global monetary and economic system, but economic democracy is on the march.

That doesn't sit well with the boys in Washington and Wall Street, so they'll be war clouds brewing and China won't back down.

I'll likely be dead by then, but I'm afraid that you younger folks are going to witness a dreadful war.

[FG Lurker]

I think you're too optimistic about China's economic prospects. China has many economic, social, and population problems to overcome.

The Chinese banking system is completely borked. A 2006 estimate of non-performing loans held by the Chinese banking system and guaranteed by the Chinese government was around US$500 billion. These non-performing loans were to state enterprises. With all the stimulus spending over the past few years (not to mention all the Olympic spending and the large number of other public works projects) I would not be at all surprised to see this number much closer to $1 trillion now than $500 billion.

China's education system is still quite poor, especially in rural areas where more than half the population is. Uneducated people are not generally very productive people from an economic standpoint.

The one-child policy has lead to something that is called the 4-2-1 problem. 4-2-1 means that the average couple (2) has only one child (1) to care for but has four parents (4) they are responsible for. ~70% of people in China have no pension so many of these couples will have one child but 5 dependents to take care of. Life expectancy in China is climbing bit by bit which is making this problem worse.

As we all know, China's economy is heavily based on low-priced manufacturing. As China becomes more expensive (this is already happening) many companies will move somewhere cheaper. Globalization is very much a double-edged sword. It is not at all clear what China will replace this manufacturing with as it starts to migrate away.

My feeling is that the current reporting on China is similar to the 1980s reporting on Japan. Japan was destined to take over the world and was going to outstrip the US as the #1 economy. Didn't quite turn out that way. I also think that when we look back on this period it will be very obvious that the economic numbers pumped out by the Chinese government were about as accurate as those of the Soviets.

[Fullback]

I'm sorry, I made a mistake on the timetable and should have mentioned that the estimates are by Goldman Sachs and other economists, not me. They say about 20 years to China parity and 40 years to double US GDP.

It's staggering to see where Japan will rank in 40 years. Japan is predicted to go from 3rd to 8th, behind China, US, India, Brazil, Mexico, Russia and Indonesia.

[ketchupkatsu]

How does the Yen do this, Moody recently downgraded the Yen to a negative outlook and the Yen rallies across the board against every major currency?

[Taro Toporific]

[IkemenTommy]

My worry is....

Yeah fuck that shit. It didn't take them long enough to adjust to the new price of barrel.

[AlbertSiegel]

76.32! Can someone please explain this to me?!?

[Bucky]

[ketchupkatsu]

Wow, that was steep and fast.

The usd jpy is starting to return to about were it was trading before that drop.

Must have been some kind of programed trade, never saw that large of a fall that fast.

Hopefully the BOJ will intervene and help stabilize that markets.

[IkemenTommy]

Hopefully the BOJ will intervene and help stabilize that markets.

The government has much higher priority than that.. like diverting the nuclear plants from having a catastrophic meltdown.

[Coligny]

The government has much higher priority than that.. like diverting the nuclear plants from having a catastrophic meltdown.

Unlike for my mom, I sort of expect governement to be able to manage several clusterfark at the same time. Especially when they are linked...

[IkemenTommy]

I should add that while they are doing such a splendid job having the whole situation under control up there in Fukushima, I expect the same with trying to manage the yen-dollar situation.

[ketchupkatsu]

The government has much higher priority than that.. like diverting the nuclear plants from having a catastrophic meltdown.

I knew the MOF was part of the government, but I thought the BOJ was a private bank as those in the U.S. and Europe.

[FG Lurker]

I knew the MOF was part of the government, but I thought the BOJ was a private bank as those in the U.S. and Europe.

Intervention requests come from the MOF but the BOJ does the actual intervention. Regardless, I can't imagine the MOF is currently all that occupied with either the quake or the Fukushima situation.

[Cyka UchuuJin]

is the euro going as wildly as the dollar? (just woke up and have to give my recommendation on a exchange rate for euro-yen for pricing for the next year)

[FG Lurker]

is the euro going as wildly as the dollar? (just woke up and have to give my recommendation on a exchange rate for euro-yen for pricing for the next year)

Yup, everything is going nuts:
http://www.xe.com/currencycharts/?from=EUR&to=JPY

[waruta]

is the euro going as wildly as the dollar? (just woke up and have to give my recommendation on a exchange rate for euro-yen for pricing for the next year)

Dunno if you want us FG'ers to be your source on next year's predictions

[Mock Cockpit]

Dunno if you want us FG'ers to be your source on next year's predictions

No shit. If I could make any half decent predictions I'd be on my yacht in Tahiti right now.

[cstaylor]

Are Japanese banks even selling dollars at this point? You might need to wire yen outside of the country to trade a large amount of currency...

[FG Lurker]

I'm sure most have already seen this but the G7 has agreed to support Japan with coordinated intervention to weaken the yen.

I'm sure the tinfoil-hat crowd has already started furiously concocting conspiracy theories about how Japan engineered the quake, tsunami, and nuclear plant problems to weaken the yen.

[AlbertSiegel]

and at 79 to the USD again...