Seeking Alpha

The yen (FXY -0.9%) legs down to a new multi-year low - the dollar now buying ¥103.24 -...

The yen (FXY -0.9%) legs down to a new multi-year low - the dollar now buying ¥103.24 - continuing a truly remarkable move since late last year. It's an instance where politicians told you they were going to devalue, every trader and strategist around told you they were shorting the yen, and sure enough the yen went down ... hard, and in as straight of a line as markets ever allow. Ah, if it were always that easy. Other ETFs: JYN, YCL, YCN.
Comments (4)
  • Chris DeMuth Jr.
    , contributor
    Comments (3892) | Send Message
     
    So far so good: http://seekingalpha.co...
    17 May 2013, 10:19 PM Reply Like
  • divinecomedy
    , contributor
    Comments (466) | Send Message
     
    Well, wouldn't that trade only work well if Gold is going up together with the dollar?
    17 May 2013, 10:30 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (3892) | Send Message
     
    No, that is not necessarily the only circumstances that make this investment work; the major exposure is to the Yen itself.
    18 May 2013, 06:14 AM Reply Like
  • Island_Dweller
    , contributor
    Comments (339) | Send Message
     
    The Yen's tumble is truly remarkable but should come as no real surprise. Many reason's for this move include a monumental shift into equities. Investors are concerned about missing records set by the S&P and the pop in the Nikkei, etc. Equities are hot and money moves to the beat of the momentum.

     

    Further, Greece has been upgraded and there's less risk in global financial markets. Europe continues to improve, records highs in the U.S., and now the Nikkei joining the jubilation - investors have to consider the opportunity cost of having their money sit in a broken trade i.e. long the yen.

     

    Additionally, Yen shorts have been burned for so many years, the pent up demand to short the currency has finally come to fruition, and the momentum has certainly solidified since December '12.

     

    Regardless of how much emphasis is put on the BoJ's (Bank of Japan) willingness to print and devalue and "Abenomics" being credited for the move, the fact is the global market drives currencies more than anything else. As long as equities ride higher and break higher, and financial institutions shore up their liquidity, there's no reason to stay conservative, in other words there's no reason to search for safe haven investments. Gold is certainly feeling the effects of this trend as well.
    18 May 2013, 09:59 AM Reply Like
DJIA (DIA) S&P 500 (SPY)