7 feb 2006 brutal yen correction, any thoughts?

2

2cents

any educated guess as to what sort of size must have been necessary to generate this type of correction against all yen pairs?

i know the exporters can move a couple billions ($) but its unlikely they wld do so simultaneously same day same time when there is no real immediate compelling reason (even this coming thursdays speech from fukui: a move on rates is quarters away at best)...

there was this talk of 107/107.5 strike usdjpy options on huge notional basis entered into by a big japanese life insurer as the move had just started (20 pips from top) - see earlier "short eurjpy..." thread - which makes one think these guys may have had a ton of $ to sell, therefore might as well follow if not precede... but still??!!

any thoughts?
 
This has been happening periodically for the last 8 months. Random massive Yen corrections, and then all of a sudden, a return to the norm again. The press calls it changing to the belief that the BoJ is nearing the end of it's nearly free money system. But that rumor is about as overplayed as the Yuan reval, or Osama is caught ones.
 
I would suggest you ride it. These big intraday yen moves usually indicate the begining a nice 2-3 swing trade.

Good money maker.
 
I have been long this pair for a while and I am sure this had nothing to do with it, but I had price hitting a key technical point at this time also. I use some long term regression channels and it reversed right at the mid-point and I can now see an extended move down may be possible.

I was lucky enough to short last night into this technical line and will add to the short below 117.50.

THis was just blind luck for me I think. Not sure what the real story is. I am traveling, but I will try to post the chart later if I can.

DRT
 
Waiting for plane in Philadelphia so not my best effort.


This is the 1% regression chart. If the bottom of this channel draws price, then it could go lower. Of course, it could go higher or sideways too.
 

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Quote from Ivanovich:

This has been happening periodically for the last 8 months. Random massive Yen corrections, and then all of a sudden, a return to the norm again. The press calls it changing to the belief that the BoJ is nearing the end of it's nearly free money system. But that rumor is about as overplayed as the Yuan reval, or Osama is caught ones.
More...

Look at the connection to gold, specifically gold sell-offs coinciding with Yen strength. I mention that in reply to your post because you are one of two traders I recall first mentioning a connection between these bursts of price action in Yen and gold.

Maybe the bursts are caused by unwinding of trades made up of US treasuries-for-carry (i.e., long dollar) plus gold-as-hedge.
 
thks for taking the pain to attach a chart downrivertrader, however as you say... ;-)

chood, interesting - i haven't had a chance to check out the goldismoney.com forums but will def do soonest!

there was this article in the FT yesterday Feb 7 summarizing some of the potential reasons / triggers but totally inconclusive (and incorrect in parts but...)

fwiw, this stab into 3 jpy crosses, oil & gold simultaneously, apparently caused by massive yen buying by japanese trust banks (and probably not just them) was most likely triggered by a sudden fear of a repeat of the dec 2005 scenario (when usdjpy went from 121 to 114 in the space of a few days on the basis of fukui's glorious comments)... but why the coordinated squeeze in mid-afternoon after equity mkt close in tokyo on a 7th of feb, instead of rampant yen-buying over a couple of days? or is it what was happening but it was just so much that it became obvious to the mkt how much was moving across the table, hence the resulting squeeze?? i haven't found anybody in tokyo with a clear answer...

anyway, next trade, next set-up...
 
Quote from Chood:

Look at the connection to gold, specifically gold sell-offs coinciding with Yen strength. I mention that in reply to your post because you are one of two traders I recall first mentioning a connection between these bursts of price action in Yen and gold.

Maybe the bursts are caused by unwinding of trades made up of US treasuries-for-carry (i.e., long dollar) plus gold-as-hedge.
More...

Oh, there's no doubt a connection between it and gold. The question is more which is chicken and which is egg.
 
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