The great Aussie-yen unwind

Discussion in 'Forex' started by ASusilovic, May 14, 2010.

  1. Get ready for the great unwind in yen-Aussie dollar trades.

    That, at any rate, is the view from JP Morgan’s Japan currency strategist Tohru Sasaki.

    As he noted on Friday, Japanese retail forex margin traders have not reduced their yen shorts much on an aggregate basis, despite the brutal yen appreciation seen last Thursday (nearly 14 per cent against the Aussie in less than 24 hours and nearly 6 per cent against the euro, to Y113.67).

    According to Sasaki’s estimates, the total amount of aggregate yen shorts held by FX margin accounts was Y5,500bn ($59bn) as of May 13 compared to the recent peak at Y6,3oobn on May 5.

    The most notable move was in AUD/JPY, Sasaki writes:

    FX margin accounts increased JPY shorts against AUD even on May 6, when AUD/JPY declined by near 10% and after then, they continued to accumulate JPY shorts against AUD. The estimated amount of long AUD/JPY position was A$28 bn (Y2,300bn) as of Thursday, close to the historical high.

    This suggests the heightened risk of potential unwinding once AUD/JPY turns direction again.

    Have fun...:cool:
  2. s1hoe2dt


    Good find.

    Everyone knows that the fiscal situation in Japan is a disaster; however, much info about regarding Kyle Bass/Hayman Advisors theory that they have finally reached the tipping point regarding the need to finance their deficit spending externally. If this is the case, significant JPY weakness is in the not too distant future.

    Something to watch....
  3. Why is Japan’s High Debt Seemingly Lower Risk?

     High domestic savings
    &#61550; Low foreign ownership of debt (< 14% of GDP)
    &#61550; Strong home bias
    &#61550; Stable institutional investors
    &#61550; Local banks purchase high % of Govt debt

    Source :

    Deutsche Bank Research
  4. s1hoe2dt


    It goes something like this: Almost 40% of JGBs need to be rolled in the next two years. Japanese demographics are such that they have now reached the point where retirees have more outflows than inflows. If government can not depend on internal source of funding, then it must turn to the global markets. Global markets will demand a much higher rate on JGBs than locals, potentially kicking off a death spiral. Interview with Bass found here:
  5. s1hoe2dt


  6. jasonc


    wow it has dropped 7% vs the yen in 2 days . I am amazed how little this is being talked about, the move is huge. Anyone looking at buying soon?
  7. s1hoe2dt


    I have seen talk of 65 if the sell-off gets out of hand, but that's just a guess. Now that it has gone parabolic, who knows where it will stop....
  8. m22au


  9. 75.18




    Our Japanese friends like Fibo numbers...:p
  10. It's an outrage!

    SEC, do something!
    #10     May 20, 2010