Forex Investment and Currency Trading

14-day RSI: Bullish signal The 14 day RSI is at 61.15 and is on the rise and is now at the highest point it has been since August last year. The ‘BUY’ signal triggered by the crossover of the 30 line from oversold levels in mid-December is still in place here.
Stochastics: Bullish signal The fast stochastic is at 96.21 and still rising well above the overbought line warning that the ‘BUY’ signal could be overdone here. The slow stochastic is not far behind at 94.37 and this too is rising.
MACD: Neutral signal The MACD indicator is rising fast, but both [...]

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Having judged that the JPY’s surge and its interaction with domestic equity market sell-offs have intensified downside risks to the Japanese economy and the financial system, the Japanese authorities have begun to take policy steps to stem adverse market moves. As for the impact of the stronger JPY on the Japanese economy, because crude oil and raw materials prices have turned down, negative effects on exports now outweigh benefits of lower import costs. In fact, the Japanese economy’s reliance on external demand has been on the rise. The ratio of exports to GDP rose to 16.2% during the year to [...]

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Correlation with vol On average, movements in JPY have been more tightly correlated with those from VIX than any major currency over the past two months. This supports the view that financial turmoil and attendant volatility have been the decisive factors in driving JPY, as investors have become concerned with potential for a reversal of carry trade in the face of widespread deleveraging.
Poor domestic fundamentals Japanese fundamentals are grim, but this spells further JPY appreciation. The epicenter of credit woes sits outside Japan, but reliance upon net exports for growth points to shaky prospects. The BoJ is likely to acknowledge [...]

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USD/JPY seems to have an on/off switch when compared to the other major currency pairs. Add to that the fact that USD/JPY liquidity can be similarly fickle. Sometimes, hundreds of millions of USD/JPY can be bought or sold without moving the market noticeably; other times, liquidity can be extremely scarce.
This phenomenon is particularly acute in USD/JPY owing to the large presence of Japanese asset managers. The Japanese investment community tends to move en masse into and out of positions. Of course, they’re not the only ones involved in USD/JPY, but they do tend to play the fox while the rest [...]

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