"The positive spin on recent US economic data has caused some profit taking in US treasuries, and a back-up in 10-year US TB yields from recent lows is helping to push the S&P 500 back toward the August high of 1,129 and keep the Nikkei 225 above 9,000 despite JPY/USD resuming its climb to a fresh 15-year high of Y83.32._ In the current trading range, the bullish views of the inflationists seem to be pretty much balanced against the bearish views of the deflationists?even though the deflationists seem to be getting all the press these days._ There is continued speculation about Japanese forex intervention, despite the impotent threats about taking "appropriate action". DPJ candidate for president Ichiro Ozawa says the MOF should intervene even though he knows as well as anyone else the market impact may be limited without the unlikely cooperation from the U.S., and there is even talk of the BOJ's new crew (the old crew that intervened in 2004 are long gone) making dry run practices at intervening. From what we can determine by looking at the monthly correlations between JPY/USD quotes and various factors, the highest correlation (R-squared) is US/Japan 10-year bond yield spreads (46%) and the JPY/USD commitments of non-commercial speculators on the CME (42%), neither of which the BOJ or Japanese government have any meaningful control over. Thus the pressure on JPY is likely to continue until US Treasury yields begin to rise. When this happens, however, USD/JPY could rebound more than the market anticipates and with it, a meaningful rally in Japanese equities. Meanwhile, we see a big disconnect between the dash into gold and bonds and the VIX S&P 500 volatility indicator, which is still down near 20 and showing no signs of the concerns that are ostensibly driving investors into gold and bonds. While cautious because of continued downgrades in economic growth expectations, investors are as yet uncertain as to whether this is a mini-bond market bubble or a tectonic shift in bond yields as the US succumbs to the Japanese disease?leaving gold as the default choice as the debasement of fiat currencies is expected to continue in either case; even though gold in US dollars has already risen 400% over the past eleven years and the DJIA has declined over 80% against gold since 1999." Source TJI
He, he. Nice analysis. Although I disagree with the notion the market impact of BOJ interventions "maybe be limited". BOJ has never lost a fight against speculators.
Interesting read. http://www.dailyfx.com/forex/fundam...1116-US_Dollar__Trading_America_s_Record.html
I see 95 in play, we shall see how today closes, but it's already looks like a strong bounce with confirmation from BOJ to keep weakening the Yen. No doubt a crowded trade as this one will result in a strong unwinding of Yen long positions at least. 95 to 100 is based on multiple divergence in Monthly chart as shown above. No PPT my ass
If anyone is interested, I got out of my long yesterday with a small loss and therefore missed on the overnight up move.
Here is Monthly chart of Ninja. 20 SMA has historically acted as a magnet. This time expectation ought to be the same considering the track record, it is @ 91.8 <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2954413>
There used to be a yield gap between 10yr Treasuries and JGB´s. It´s now almost non-existent. The Chinese hunger for their reserve diversification brings a solid bid for JPY - every month.
20 Monthly SMA is 1st magnet ~91. Monthly closure above 20 SMA & declining TL would point to 100-101. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2955128>