I just went short at these levels, anticipating bounce in the Yen. Using tight stops.
Here is some interesting commentary from Don Coxe that covers the Yen:
http://bmoharrisprivatebanking.com/webcast.asp
"But apart from this kind of thing, the banking system in Japan seems to be relatively well-healed from its desperate position of the 1990âs. So why is the Yen collapsing? And what is the point at which China forces a halt or openly challenges Japan on what amounts to a stealth devaluation?
Now, this is a very serious story. Because if the open spat between Japan and China, which has been accelerating in recent months, if it gets into something worse and weâve got this Asian conference coming up where China has made it clear that it doesnât really want to deal with Japan. Theyâve turned down opportunities for meetings between Hu Jintao and Koizumi. Weâve got an emergence here of something which is beyond the bad relations that have characterized this Japanese-Chinese relationship for the last couple of years.
Now, as you know, Iâve taken an optimistic view of this, that Koizumi was negotiating a tricky path between the unregenerate nationalists and die-hards like Shinto Ishihara, whoâs the mayor of Tokyo prefecture and others within his own party and heâs clearly been one side of The Great Symbiosis relationship, because the buying of Treasuries to manage this relationship, most of it has been done, of course, since the bear market of the Dollar which began on February 1st, 2002. So if you look at that chart, what you see was this was a period of time when he orchestrated a rise in the value of the Yen to satisfy China and did it at a time when he was buying all these Treasuries. He was doing more than his share of supporting that relationship.
So itâs puzzling, in a way, to see that they are prepared to let this relationship deteriorate. Now, weâve had a couple of geopolitical incidents, once where there was a Chinese submarine in Japanese waters and this open battle over the rights to oil and gas in the straits between the two countries, but I guess I was of the view that cooler heads would prevail on both sides, that it was convenient for both Chinese and Japanese leaders to let unpleasantries be aired in public but that nothing serious would come from this. This was just a way of letting steam blow off from their own nationalists.
Well, itâs always difficult if you unleash an essentially racism and nationalism, itâs always difficult to rein it in when you think itâs reaching the toxic stage. And what alarms me, frankly, is looking at this chart, 1.22 on the Yen was the level that the Chinese indicated to the 325 international banks that bailed out Indonesia in August and September and October of 1998, 1.22 was what they said was the minimum level that they would accept for the Yen. Well, Japan, as you can see from the chart, drove the Yen almost to par on the Dollar.
So now, weâre trading at 1.20 â 1.21 range on the Yen, which is uncomfortably close to 1.22, which is the line in the sand which Japan drew seven years and two months ago. So, I donât know whether China has revised its range for the Yen, this is all conjecture. Itâs conjecture based on external evidence and extrinsic evidence as opposed to any statements or policy bulletins.
But the reason Iâve chosen to draw it to everybodyâs attention, is that this fall in the Yen is a major global development. Itâs clearly behind this breakout in gold. Itâs probably contributing that 18-year high in silver and itâs one of those things that could destabilize the system."
He started shorting from 115.70. I recall that he told me that he knew what he was doing.