I wonder. And wish that someone could answer it here.
Yen rises even despite of fundamental that are supposed to affect it as the recent statements by the Group of Seven, they warned the Japanese currency posed a threat to financial and economic stability. Experts even say the yen will strengthen by 50% or more.
Hmm, that reminds of me something⌠I mean, few months ago, âexpertsâ were saying that the US financial system was fundamentally wrong but that technicaly it would rise indefinitely. And in the endâŚ
So I wouldnât bet too much on a long rise of the yen, even though itâs currently time to buy (never go against the trend as they say)
At this point it is a flight to quality investment arena. The dollar is gaining due to the fact that countries are buying government backed securities because they know they are safe. Japan has a boatload of american dollars in their backpack so that is one reason the yen is getting stronger with the dollar. I am sure there are other reasons as well but I never try to over analyze. Hopefully someone else can apply their knowledge to this thread also. Interesting topic.
Well, I never said it would be a good lifetime investment, but it is certainly a good way to look at right now, it doesn�t necessarily it is definite, it might change next month or tomorrow.
I understand, thank you Peter. Anyhow, as I am just learning Forex (spending some good time on precious Babypips tutorial), and tutorials are advising to learn with one pair, I feel more comfortable to go with EURUSD. Or maybe I should give a look at EURJPY.
In todayâs environment, price action has pretty much been dominated by sentiment. Whatâs that sentiment? Risk aversion.
Because of the financial crisis, firms have had to reduce the amount of risk in their books. This means selling off assets. Before the credit crunch, for a long time firms have been selling low-yielding assets to purchase riskier assets. This includes the âcarry tradeâ where you would sell the Japanese Yen to buy higher yielding assets like other currencies, equities, commodities, etc. Now that firms are âde-leveraging,â they are selling off those riskier assets and buying back the Japanese Yen. This is why weâve seen the Japanese rally like never seen before in the past couple of months while everything else, equities, high-yielding currencies, and commodities fall through the floor, and it will continue to do so until firms have reduced their leverageâŚwho knows when that will be, I donât knowâŚ
Fxdude, excellant explanation and very true.