"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Friday, March 18, 2011

Long Term Japanese Yen Chart

The following chart is a very long term weekly chart of the Japanese Yen/US Dollar cross chart.

Please note that I am using the cross as it is traded at the CME's IMM exchange and not as it is typically quoted on the Forex boards where it is quoted inversely as USD/JY. I personally prefer looking at the cross in this manner because for me it is more intuitive in the sense that if I want to know whether or not the Yen is strenghtening I can look at this chart and see if it is headed higher.

When you see the level at which the Yen has been driven, you begin to understand why the BOJ is so concerned about its level and why the G7 agreed to undertake a coordinated intervention to knock it lower.

Note also the level at which the Yen was trading in mid 2008 when the carry trade began to unwind in earnest. Since that time the Yen has appreciated against the Dollar by nearly 40%!


  1. Dan, technical analysis aside, Austrian economics would argue the opposite - the yen should be allowed to appreciate to make rebuilding the economy cheaper. I'm just reiterating points made by Peter Schiff (see Youtube: Japan's broken window) and Michael Pento on King World news. All this competitive devaluation is enough to make one ill.
    I would be interested in your take on why the JPY was beaten down by the G7 - what is their agenda? I have not found an answer to this on the web.
    Thanks for responding to my HUI question.

  2. Dan, I just listened to your own interview on King World News which partially answers the question. So the G7 formed the consensus that the JPY should be weakened to "aid exports", which appears to contradict common sense when they will need to import commodities to rebuild. Or the G7 wanted to act the Good Samaritan for the unfortunate hedge fund managerss caught out with the carry trade.

  3. assimilate this;

    see my new article posted that deals with this


  4. Dan,
    On KWN you stated that with the risk trade on last week with the problems in Japan,middle-East etc gold and silver were taken down.I have always believed Bullion had been touted as a safe haven investment when uncertainty rises .So, where is the flight to safety, where is the spike in bullion, EFT, and mining stocks ?You imply just the opposite--your point of view makes no sense to me , the PMs should have been going up not down,You also said if this weekend thins looked they were getting better the metals would go higher--so less risk they go up, more risk they go down ,thats just the opposite of what should be going on

  5. Robert - Markets go where they want to go when they want to go, not when you think that they should. "Should have done this" or "should have done that" is an error that novice traders make. You have to learn to put aside what you think a market should or should not do and learn to go with the direction of the trade if you want to make money. At the very least, you need to get out of the way and then re-enter when the market begins to behave in a manner in which you initially thought it would.
    The fact is that today's markets are not run by thinking human beings but by computer algorithms which make decisions based on price movements. In the SHORT TERM those movements may not make any sense. In the long term the fundamentals always win out. If you are trying to trade these markets with the kind of attitude that you are currently exhibiting, I would suggest that you do something else. Learning to adapt and put aside one's own bias is the first step to surviving in today's algorithm driven markets.

    The flight to safety was out of everything except the Swiss Franc, US Bonds and the Yen. Even the precious metals get knocked lower initially when risk trades are coming off. Until such time that they trade in a different fashion one has to understand what is the driving force behind their price movements.


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