richrdinbellingham

Friday Outlook: Commodities, Emerging Markets

The daily chart of EUR/JPY, FXE:FXY, the barometer of the yen carry trade, shows that the yen carry trade is unwinding. The weekly chart of FXE:FXY shows that the yen carry trade has topped out.

Crown Forex writes "As for the Yen being the star in the forex market, risk aversion and investors risk appetite was able to help the yen gain against majors in the markets as investors were unwinding their carry trades taking the USD/JPY pair down to the 106.20s as the dollar continues to lose ground. Against the Euro, the yen gained from a record low at 169.45 to continue dragging the pair down to the current support level at 167.12 while the GBP/JPY is currently at 211.10s".

Risk aversion has come to the traditionally yen-carry-trade favored BRICs as your charts show: there is significant disinvestment from Brazil, EWZ, Russia, RSX, India, INP, and China, FXI.

And risk aversion will rise significantly as corporate profits turn down; investors who sell stocks will be looking to the financial safehaven of gold.

And a higher yen means a lower US dollar; in as much as gold trades inversely of the dollar; gold will be going up.

Your chart of DBB is helpful; and the comment "still a mess but trying" is totally appropriate as gold is performing better and more reliably than the industrial metals.

Your posting is most timely and helpful.