Tuesday, 28 August 2007

 

Yen Gains on Speculation Credit Losses Will Deter Carry Trades

Aug. 28 (Bloomberg) -- The yen strengthened for a second day against the dollar on speculation banks will report more credit- market losses, prompting traders to pare higher-yielding investments funded by loans in Japan. The currency rose the most against the New Zealand dollar, a favorite for carry trades, after DBS Group Holdings Ltd. said it has more at risk from asset-backed debt than it earlier reported. The yen is the best performer among the 16 most-active currencies this month as U.S. mortgage defaults caused stock markets to drop and banks to curb lending.
``The current environment is one of risk aversion,'' said Mitul Kotecha, head of currency strategy at Calyon in London. ``We are going to see more of a pullback of carry trades.''
The yen advanced to 115.53 per dollar at 7:30 a.m. in New York from 115.86, and is up 2.8 percent in August. Japan's currency also traded at 157.95 per euro, from 158.12 late yesterday, bringing gains to 2.8 percent this month

http://www.bloomberg.com/apps/news?pid=20601101&sid=au6mhUvyOzjc&refer=japan

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# posted by My FX Tools @ 04:51 0 Comments

Sunday, 19 August 2007

 

Yen drives correction

Wow what a week last week, the yen strength seeming to drive the global stock market plunges, which perpetuates itself, and the carry traders are bailing out. Selling begets selling. It seems like the long anticipated unwinding has occurred.. the only question is, where is the bottom of all this? I would certainly be waiting for the daily trend to turn up before 'business as usual'.

Yen Set for Best Week Against Dollar Since 1998 on Credit Risk

Aug. 17 (Bloomberg) -- The yen was poised for its biggest weekly gain versus the
dollar and euro in almost nine years as traders dumped investments funded by
loans in Japan.
The yen rose against all currencies this week as turmoil in
credit markets and a global rout in corporate bonds and stocks prompted an
exodus from so-called carry trades. The Japanese currency had its steepest
advance in more than three decades versus the New Zealand dollar, a favorite for
such trades.


http://www.bloomberg.com/apps/news?pid=20601101&refer=japan&sid=arDchnf7ZG88

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# posted by My FX Tools @ 00:23 0 Comments

Thursday, 26 July 2007

 

Yen Advances as Falling Stocks Prompt Carry Trade Unwinding

It would be wise to hedge any open long positions to cover what could be a major fall.

July 26 (Bloomberg) -- The yen rose against all 16 of the most actively traded currencies as global stocks fell on concern tighter credit will slow the economy and traders bought back yen used to finance investments outside Japan.

Japan's currency strengthened to the highest in three months against the dollar and increased 4.4 percent versus the Brazilian real and 4.1 percent against New Zealand's dollar. The 10-year swap spread, a gauge of what companies pay over benchmark lending rates, widened as much as 77.38 basis points, the most since January 2002.

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# posted by My FX Tools @ 14:41 0 Comments

Saturday, 21 July 2007

 

equity impact of yen strengthening


Its interesting to take this opportunity to look at the effect of the yen strengthening on our overall equity at this point in time. 4 trades were closed on the friday, 3 on GBPJPY , 1 on USDJPY. We have 9 gbpjpy positions open, and 1 usdchf, 1 usdjpy. Floating p/l is $1,174. Monday i will have to take a look, as more of those GBPJPY trades should have been closed, the ones that are from 246/247 levels. This can sometimes occur as the trade close failed, due to a fast moving price. So the current equity is 94.48k, down from a few days ago, but not by that much. With 9 GBP positions, (each around 0.46 lots), you are earning $85/day in swap, just for being in the market. thats over $1000 every 2 weeks, just for holding your positions. Thats $26000/year, or 25% growth even if your position goes nowhere. You see where i am going with this... build your positions throughout the market. In fact i am thinking of writing a new EA to exploit this, called the accumulator... watch this space.
Take a look at that trendline on GBPJPY, quite a neat fit.
At this point we are using the profits made, our original cash investment, of 50k, could be withdrawn and we could continue to trade.

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# posted by My FX Tools @ 18:55 0 Comments

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