Quick Take
Few will argue that the hot topic of conversation online is the debacle of the Japanese currency. Some traders at banks are speculating that the correlation breakout of Gold and the Yen represents a paradigm shift in the logic to trade the Japanese currency. I personally disagree and suspect that when a move is so aggressive without apparent justification, there is hot money ‘in the know’ preparing for a potential ramp up of further easing by the BoJ. It might well be, as an alternative, that Japan’s Government Pension Investment Fund has opted to reshuffle its strategy seeking out higher yielding opportunities via USD-denominated instruments. What’s clear is that no one can really pin point at this stage what’s caused such a dramatic fall in the Yen value, but through history and economics, out of the list provided below, some could help you contextualize it.