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> and probably Japanese Yen remaining the strongest currency for
>months to come.
The crisis was mainly a technical one that most of us wouldn't have
known anything about, if we had left the TV off, except for the
barometer of the market, where necessary selling has made us all too
aware of the clear and present danger.
Basic human nature, and peoples primal responses, were, as always,
grossly underestimated.
IMO the strength of the Yen and the USD is primarily based on a
return of capital to home soil... when we get hurt playing in the
yard we run to mother.
If I am correct then it won't last.
I put more weight on local opinion and in this case the locals agree:
- from RGE monitor
http://www.rgemonitor.com/404
(hope you can read the link - I am logged in as a subscriber so it
might not be a public article).
JPY/USD may fall below 100 in event of a dollar crisis, but won't
stay there in the long-term due to 1) economic decline from
demographic shift, 2) large interest rate gap, 3) yen failing to
become key reserve currency, 4) declining home bias of baby boomers
(Mitsubishi UFJ)
from a NewYork bank article:
it was very noticeable that, as the March low in USD/JPY was finally
broken this morning, Economics Minister Kaoru Yosano told a news
conference that it is desirable for currencies to reflect Japan's
economic fundamentals. Although he did his best to sound sanguine
about the situation ("I don't think the current volatility in stock
and currency markets will last so long"), this does sound like the
first sign that the Japanese authorities are starting to become
concerned about the continued strengthening of the JPY.
Not a good article but I emphasis the ministers opinion that the
volatility won't last long.
The emphasis on Japanese government action is the authors although
one does wonder what their thinking is on the subject and whether
they are likely to act.
Japan has been running current account deficits for a while and has a
penchant for foreign investment ... I believe the FX rate is mainly a
result of repatriation.... how long can that go on for.
Countries that have been running current account deficits are amongst
the leaders on the FX decliners board (AUD, GBP, NZD, CAD) ... the US
is the exception there but the migratory habits of their companies,
especially financials (who have been forced to repatriate?) could
have increased demand for the US in the short term ... if I am
correct then the USD won't hold up either.
> Now EBC funds still at 3.75% ? They are going to cut fast, much
>faster than FED, IMHO.
I am not certain that central banks will pull the interest rate
lever ... the US can't go any further and how effective will it be
(probably counter productive) ... pump priming is more likely ... Aus
has already gone down that path.. Euro to follow.
The other point is that this is a huge strain on Euro ties ...
responses will not necessarily be central.
As an aside Hungary increased rates to 11% today??? to stablise their
currency.
There is some talk around about repegging currencies to Central Bank
settings and also some grand world wide 'new monetary order'.
> If situation evolves in that direction we are going to see EURUSD =
>1.0 soon
These cliched round numbers still seem to hold sway ... it didn't sit
right with me that the AUS would ever reach parity with the USD and
it burnt out at around 98cents .. . can you see Euro parity ... it
might be a bridge to far.
Anyway these are interesting times and who can predict anything.
I am just a boring old reactive trader.
It is fun to speculate and good to exercise the guessometer but I
wouldn't put money on it.
brian_z
--- In amibroker@xxxxxxxxxxxxxxx, "Tomasz Janeczko" <groups@xxx>
wrote:
>
> Hello,
>
> Did you see this daily effective FED rate chart:
> http://www.newyorkfed.org/charts/ff/
>
> Usually effective rate follows closely target rate (currently at
1.5%)
>
> In recent days effective FED rate dropped below 1%.
>
> It looks to me that FED is going to be walking in footsteps of
Japan central bank in '90s.
>
> Now EBC funds still at 3.75% ? They are going to cut fast, much
faster than FED, IMHO.
> If situation evolves in that direction we are going to see EURUSD =
1.0 soon
> and probably Japanese Yen remaining the strongest currency for
months to come.
>
> Any thoughts?
>
> Best regards,
> Tomasz Janeczko
> amibroker.com
>
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