Tag Archives: Japan

SNB pegs and all markets respond

By Admin | Published: September 6, 2011

Today, the Swiss National Bank announced the following:

Swiss National Bank sets minimum exchange rate at CHF 1.20 per euro

The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development.

The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in … …READ MORE

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Obama’s Plan and the Economy

By Admin | Published: April 13, 2011

Ahead of the World Bank/IMF meetings in DC this weekend, the IMF warned the United States on their fiscal deficit and requested an austerity plan to deal with the red ink. Carlo Cottarelli, head of the IMF’s fiscal affairs department, urged the U.S. to move soon in agreeing to a plan to contain the country’s public debt, which in 2010 rose to more than 90% of gross domestic product, or the economy’s total output according to Dow Jones. Adding insult to injury, he said “If I look at fiscal fundamentals, I see the situation in Europe improving faster than in … …READ MORE

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MIM yen trade update

By Admin | Published: March 30, 2011

On March 18th, I put out this recommendation for a US dollar against Japanese yen trade and the reasons for it:

Buy US dollar/Sell Japanese yen

Entry at current levels of 81.00

S/L at 79.75 (previous all time low)

T/P at 85.75 (86.03 is where Japanese exporters are profitable and will sell)

Here were the reasons:

The currency markets are unique due to a massive player in the markets: governments.
They can choose to intervene to buy or sell their home currency depending on the moves which they deem “volatile”.
While they act infrequently, they usually act in extremely large … …READ MORE

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Risk-Off Revisit

By Admin | Published: March 17, 2011

Back on February 22nd, I warned and predicted the start of a “Risk-Off” danger zone for the financial markets.
“The global financial markets are beginning to show signs of distress and volatility after an exceptional strong rally in US equities and global risk. The market narrative is shifting from a positive discussion on earnings and a US recovery to a negative conversation over global inflation, fiscal imbalances and political turmoil. This shift should mean uncertainty will rise and investor sentiment will pullback in reaction to this unstable environment….This will generate demand for safe haven investing like buying US Treasury securities … …READ MORE

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Natural disaster in Japan follows history

By Admin | Published: March 14, 2011

Natural Disaster in Japan

The events in Japan over the last 4 days have been riveting and all other news has taken a back seat. The consensus in the market is that this is a short-term negative event that will not have a lasting impact on the Japanese economy. Japan comprises around 8-9% of the global economy and therefore will not have a significant impact.

In World Event Trading, I wrote that earthquakes and tsunamis are the enigmas of the financial disaster universe.

“They occur with no warnings and surprise even the most sophisticated prediction models. For the trader, these … …READ MORE

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Top FX Themes and Trades: Ratings, Egypt, Ratings II, India

By Admin | Published: January 28, 2011

1. Ratings I. On January 27th, Standard and Poor’s cut Japan’s sovereign credit rating to AA- from AA and puts it on the same level as China. S&P said that Japan had no “coherent strategy” to deal with the outsized debt that will likely reach 200% debt-to-GDP this year. “The downgrade reflects our appraisal that Japan’s government debt ratios –already among the highest for rated sovereigns — will continue to rise further than we envisaged before the global economic recession hit the country and will peak only in the mid-2020s,” the agency said according to WSJ.

While the yen weakened … …READ MORE

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US next in line to bailout out Europe?

By Admin | Published: January 11, 2011

Today, Japanese Finance Minister Noda said that Japan would use its existing euro foreign exchange reserves to buy a large portion of the bonds issued by the European Financial Stability Fund. “There is a plan for the euro zone to jointly issue a large amount of bonds late this month to raise funds to assist Ireland. It’s appropriate for Japan to make a contribution as a leading nation to increase trust in the deal. We want to buy more than 20 percent.”

Japan joins China in pledging to buy European debt to quell the uncertainty surrounding the sovereign debt and … …READ MORE

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5 things u need 2 know 2dy

By Admin | Published: December 27, 2010

1. China raised interest rates 25 basis points. The People’s Bank of China increased their one year lending rate and deposit rates 25 basis points on Saturday. The one year benchmark lending rate rose to 5.81% and the deposit rate rose to 2.75%. Chinese officials are attempting to reduce the amount of lending and credit expansion to drop the rate of inflation. In November, the inflation rate soared to 5.1% and was the highest rate in 28 months. It was driven mainly by food inflation and poor families spend up to half their incomes on food. The PBOC is shifting … …READ MORE

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Why Japan remains irrelevant

By Admin | Published: December 14, 2010

Why Japan Will Remain a Problem: Late Monday, Japanese Prime Minister Japanese announced that he had directed two ministers to lower the business tax rate by five percentage points from the current 40%. “By cutting the corporate tax cut by five percentage points, we want private-sector companies to expand investments in Japan, boost employment, increase wages, thereby contributing to achieve sustained growth and beat deflation,” Kan told reporters following a meeting with Finance Minister Yoshihiko Noda and METI Minister Masayuki Naoshima according to MNI.

Sounds great, right? The problem is that Japan has been doing this type of tweaking for … …READ MORE

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There is no currency war…..(take cover!)

By Admin | Published: October 13, 2010

In a widely reported Bloomberg interview, US Treasury Secretary Tim Geithner said on Tuesday he sees “no risk” of a global currency war and wants to maximize incentives for China to allow its Yuan to rise in value. Reuters reports that he told the Charlie Rose Show in an interview that China would work against its basic development objectives if it kept its currency undervalued.

“I’m very confident over time that this is going to happen,” he said of Chinese currency appreciation. “We just want to make sure it’s happening at a gradual but still significant rate.”

Unfortunately for Sec. … …READ MORE

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