Why we may soon see some JPY strength
The JPY is undervalued...
Unlike other global economies, Japan is not facing an inflation crisis or below 50 PMI figures. The Yen has also been victim to some large bearish moves over the last few years, which are due a retrace move. In my opinion, it is starting to look like a good buy from both a fundamental and technical point of view.
As a safe haven currency, it could also see some strength with the nearing Western recession, if the recession ever comes!
All is not roses, though. GDP growth is low and unemployment is too low... There is also the issue with the BOJ's currently monetary policy.
The challenge is, which pair do you short? The JPY against the EUR or GBP is a strong fundamental trade, but the swap rates will eat away at profits on any long-term trade. The CHFJPY has a move attractive swap, though still negative, but you then lose the safe haven bias of trading both the CHF and JPY. Speaking of CHFJPY, price has just broken a possible turnaround area on the 1 hour chart, which could be a signal of some coming JPY strength and ***JPY downside.
For longer-term trades, perhaps a Yen ETF or currency index trade is best...
YCL
FXY
CHFJPY
Unlike other global economies, Japan is not facing an inflation crisis or below 50 PMI figures. The Yen has also been victim to some large bearish moves over the last few years, which are due a retrace move. In my opinion, it is starting to look like a good buy from both a fundamental and technical point of view.
As a safe haven currency, it could also see some strength with the nearing Western recession, if the recession ever comes!
All is not roses, though. GDP growth is low and unemployment is too low... There is also the issue with the BOJ's currently monetary policy.
The challenge is, which pair do you short? The JPY against the EUR or GBP is a strong fundamental trade, but the swap rates will eat away at profits on any long-term trade. The CHFJPY has a move attractive swap, though still negative, but you then lose the safe haven bias of trading both the CHF and JPY. Speaking of CHFJPY, price has just broken a possible turnaround area on the 1 hour chart, which could be a signal of some coming JPY strength and ***JPY downside.
For longer-term trades, perhaps a Yen ETF or currency index trade is best...
YCL
FXY
CHFJPY