Carry Trades and the Yen

Trend following is predicting that future price movements will continue in the direction of the past trend. Thus the original name of momentum investing. So yes you have a view and yes you are making a prediction on future price. It maybe simple and mechanical system but it is still speculation. I really think momentum investors who hold your view hold themselves back in their trading by not grasping this concept.

 

Yeah, but people were saying that plenty back at 1.28 against the Euro.
The reality is that the US has inflated it's way out problems previously, but they're running out of gas. Looking at the fundamentals I think there's a good probability (75%+) that you'll see 1.70+ against the Euro within a couple of years.

 

If we hold beneath 108, I think we'll see 103.

 

The volatility is great. Let's see 100.

 

My question to the long yen guys in either cash and futures is can you get out if BOJ intervenes at supper time on the US east coast - which is when it has been done in the past?

 

I'm not sure I agree with you, but I will give it some thought. I don't understand what you mean by "past trend". Do you mean what happened just a few ticks, or a day ago? Or do you mean trends that occurred in the "past"? I did not say it wasn't speculation, only that I am not predicting, just reacting to what the market does. Reacting to what is known.

 

So because of this, you will not take a postion in the JYen and hold overnight or over a weekend?

 

I am looking for a reversal on the Yen pairs shortly. When considering the GBP/JPY, I'm expecting a reversal between 221.85 and 220.52 for a long journey to 244/245 - so about 2500 pips.

There is a good chance the carry could continue from here.

 

Such events tend to occur extremely infrequently. We cannot predict the duration of the current environment, but usually such behavior causes first pain and then opportunity. While we may hedge out some market risk, our basic plan is to stay the course and, as conditions revert to the norm, we anticipate the possibility of an attractive opportunity...

 

No I dont trade either but do trade n225 and topix so I read and listen to the news. There's one or two officials there - in the government, BOJ, or finance ministry (can't remember) that have made some threats in the last month or so that seemed to me directed at participants in the long jpy short usd currency trade.

That intervention has happened infrequently in the past is not relevant if it happens very soon now - which I expect.