The carry trade...

[JLarsen]

Well,

it seems more attractive day-by-day.

JPY can not rise in the sky. Japanese industry heavily relies on the weak Yen.
If Yen becomes to strong, economy should slow down very fast again, which leeds to a weaker YEN ....

Some Yen Pairs lost more than 1 Year of interest advantage in the last days (4-6% unleveraged).

So start scaling in could be an opportunity at current price level.

For example using a simple Parabolic (for Entry timing and Stop) on a 4h chart may assist in timing.

Current Level Buy@228.06, but entry level declining almost 90 pips every 4 hours.

Joerg

 

[AnnaFX]

if I short the yen and buy the USD with 10:1 leverage, how would I go about hedging such a bet?

(just learning)

 

[Chood]

Dusting off this thread.

Given NIKKEI 225's resilience last night, my guess is that front month Globex YEN will trade down tonight close to --8410. But just that. I'd say YEN will climb back above 8500, with 8600 and better just possible enough to warrant the long YEN trade. 2 to 1 from 8410 with a 65 tick stop.

Too pat for YEN to drop again on restoration of status quo ante last Thursday. If JGBs pressured again, YEN oughta make 8600, as in inside a month.

Quote from Sponger:

Is it too late to participate in the carry-trade unwinding

 

[Chood]

Quote from Chood:

Dusting off this thread.

Given NIKKEI 225's resilience last night, my guess is that front month Globex YEN will trade down tonight close to --8410. But just that. I'd say YEN will climb back above 8500, with 8600 and better just possible enough to warrant the long YEN trade. 2 to 1 from 8410 with a 65 tick stop.

Too pat for YEN to drop again on restoration of status quo ante last Thursday. If JGBs pressured again, YEN oughta make 8600, as in inside a month.

YEN traded down to 8420 last Globex session, then up to 8501 in current session.

Anybody have insight on price action from here? I posted set up above as comment only. I've turned most of my attention to USA equities, which of course relate to price action in YEN.

 

[Spectre2007]

the carry trade has some basic components.

1) country A interest rate

2) country B intereat rate

implications of present conditions on future conditions.

Well country A lets say is Japan, now Japan or BOJ cant raise rates in this environment based on the present liquidity contraction. So BOJ mired in political debate, and lack of economic room to move can't raise rates. This fueled the rally up since many were using cheap yen to buy other higher yielding currencies or asset classes.

Country B are all the other countries, now these countries are mired in similar liquidity contraction. So they have to enter the easing cycle as quickly as possible. Since abrupt contraction in liquidity just raised by proxy interest rates. So countries like US/EU/UK have to start cutting rates in the future, thus carry incentive becomes less and less, also if the liquidity contraction is caused by loss of wealth from asset deflation, this forces redemptions even faster, even though the carry is still positive, the carry in its present state is a massive bubble thats being imploded. And the more dire the economic situation becomes, the faster the carry get reduced.

so usd.jpy should test 115 based on the present factors and projecting them out. 115 was the number the BOJ stepped in the past to preserve its export advantage.

 

[Spectre2007]

linear regression on daily.

 

[Chood]

Set up below is now on> I'll keep it on for a few sessions until filled, if filled. Will use exactly the price action which followed in the first globex session after the post: buy YEN at --8420 to 8410, up to 8, with stops 75 ticks under the avg in. 2 to 1 reward, so will sell em at and after 8560.

Dive in: the water's fine!

Quote from Chood:

Dusting off this thread.

Given NIKKEI 225's resilience last night, my guess is that front month Globex YEN will trade down tonight close to --8410. But just that. I'd say YEN will climb back above 8500, with 8600 and better just possible enough to warrant the long YEN trade. 2 to 1 from 8410 with a 65 tick stop.

Too pat for YEN to drop again on restoration of status quo ante last Thursday. If JGBs pressured again, YEN oughta make 8600, as in inside a month.

 

[Chood]

If JGBs remain pressured this session, I won't see an entry for long YEN anywhere near --8420. Keeping the set up on anyway in the event USA part of today brings the price to me.

 

[Spectre2007]

stabilization of world markets means carry trade will be renewed... the projection out to 115 only holds with continued declines in world equity markets.

 

[Chood]

Quote from Chood:

If JGBs remain pressured this session, I won't see an entry for long YEN anywhere near --8420. Keeping the set up on anyway in the event USA part of today brings the price to me.

Just missed an entry: 8420 was seven ticks too low ... seven ticks that'd look like about 70 ticks now (even more earlier).

Re-tooling for Sunday night.