justatrader

Black swan events: How currencies react - Yen

FX:USDJPY   U.S. Dollar/Japanese Yen
Apologies for the ominous chart title on a Monday morning, but having spent the weekend watching a few documentaries about the Japan earthquake, I was intrigued on how the currency markets react to black swan events.

The Story (Japan Earthquake - Yen)
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The Tohoku earthquake hits Japan on 11th March. What we see is a sell off in USDJPY             ... In other words, people were selling USD to buy the Yen. Goes to show how strongly the markets believe in the Yen as a safe haven even if crisis comes to Japan.

After a sharp drop, G7 central banks intervene in the markets to offer support. So they start buying USD and selling Yen, which forms an interim rally.

On 04/07 BoJ announces a stimulus package, which triggers another sell off in the markets. Few days later, Fukushima nuclear alert is given which sparks a continuation of the sell off.

This time it breaks the CB's support as well.

I could go on but follow the notes on the chart backed up by the news sources that explains the currency moves.

PS: For all those ECB QE             addicts, I stumbled upon a very nice article which is worth reading and could possibly shed light on how European QE             could work:

Source: http://yhoo.it/1nXW7t7

PPS: The chart is incomplete... There's just too much happening when it comes to the Yen.
Professional market analyst with a keen interest on futures. Love keeping an eye on the markets. Currencies, bonds, commodities. Combining technical analysis and the fundamentals. Contact me for more details.
wael
2 years ago
Japan’s Nishimura wants to cut effective corporation tax rate from FY2015/16 to bring it below 30% as soon as possible; Reuters reporting the vice econ min comments a few moments ago says economy in line with expectations; govt and BOJ ready to respond appropriately to risks; hopes exports will pick up but overseas risks continue to centre on emerging markets; gains in base wages and bonuses to offset sales tax hike impact and support consumption/broader economy ahead; says the gap between US and Japan in trade talks is narrowing, aiming to reach broader TPP agreement early; USDJPY still 101.32 off its 101.25 lows.
http://www.forexfactory.com/news.php?do=news&id=485186
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HappyKing
2 years ago
Very Interesting article, thank you for sharing
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alex.a
2 years ago
The Earthquake, YEN gets stronger... UJ goes down.
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Shadowbrokerltd
2 years ago
many thanks, If you can update the chart with more events this will be great. I find this historical data really helpful
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justatrader PRO Shadowbrokerltd
2 years ago
Yep.. Working on NZDUSD.
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