Thanks. What I see is that the parity level has been defended/bounced off since 1994. More broadly, I think it's the Yuan that needs to rise and I think the JPY is saddled with that burden, in part.
eventually i think JPY takes out the 1995 level, which was 80-85 to the dollar. at that point, Citibank predicted JPY would go to "54" or something very precise. yes, and the meaning of life is "42". very precisely wrong: JPY went the other way, to 149 or so, and has been clawing its way back down for 12 years.
Wouldn't you agree that 1995 level was a brief spike, that, when reversed, started a strong weakening leg? That was about a 6 month spike.I guess what I am seeing is that since the monster move higher starting in the back half of their stock market and property bubble, and continuing into 1994, that since that time the pattern has been to attack levels that are stronger than parity with the USD.
On a shorter time scale, I would also note that since the JPY has made its move at the same time the USD has made its move, that the rate of change in the JPY against other currencies has been even more painful for Japan. That JPY/EUR pair has been a sight to behold. I would call it a dislocation.
Let's say we agree the current move is a dislocation. My question would be, would you agree that dislocation type moves tend to not be repeatable in short periods of time? Do you see this Yen move, also, as a repricing move? If that was the case, then I would say repricing moves tend to hold for longer.
Here is my view: I see the JPY move against GBP and EUR, and to a lesser extent against CAD and AUD, as a dislocation move. Which is to say I don't think it will repeat any time soon naturally. And also, as I look at the chart of the JPY, it seems intervention works best coming off these dislocation moves.
Best,
G |
