Not fun to watch this as I use it and the yen to hedge my dollar exposure. It seems every currency stinks right now except dollar and yen, one by one they are going down I'm trying to find an argument to use a different currency but its hard, they have a budget surplus(they can bailout their banks) current account more or less in balance and the rate has already been cut a lot so no surprises to come I cant use any kind of european currency because the whole region banking system seems like a time bomb(if EUR goes down it will be a bloodbath for them all). NZD AUD are like CADs but worse due the carry trade accumulation CC and budget deficits. Pure Yen seem like a trade and not a hedge. suggestions?
I trade Yen, Aussie and CAD. Here's my perception: Yen is the fear factor. I'm amazed at how high it's gotten. I missed some of the upside and caught some of it. I think it's LIBOR (>5% today) that's got it running so high. LIBOR is another fear factor which makes the Yen and LIBOR proxy's for each other. Aussie I was very surprised to see it tank so much. I had a good run down on it then went long and gave back some. They have a good "business plan" in Australia. Exports of commodities. Problem there is commodity prices and demand going down. Not sure what to take of it and I stopped trading it about a week ago. I missed on the 1% rate cut. CAD I agree on the soundness of the "business plan" of the Canadian economic system. I think it's overdone and I'm looking to get long here soon. Of all of these currencies, I see them the same as I saw commodities earlier this calendar year. When gold and oil were skyrocketing I was asking "What's the fundamental here?" and the only answer I could get was "They're trading these because they can" (and they could not make money in a shrinking S&P market. The rapid plays in these currencies will chill out and they will find an equilibrium just like what's going on in commodities right now. CAD is drawing an intraday penant and the life of contract volume is heavily weighted short. I'm looking for a big pop. Keep in mind that on Friday's we commonly give back some of what we did all week. With big moves this week look for a Thursday afternoon or Friday morning reversal on many instruments. Good luck trading!