Hi Sun,
My take on: <<To me it provides yet another proof that when everyone moves to one side of a trade (in this case yen carry), it is the losing side.>>
That's certainly something to be considered, when you find yourself with a lot of company ;-) The other possibility though, is that sometimes everyone is doing it because it is in fact right (e.g., large short interest in poor stocks that do eventually go bankrupt). Unfortunately, not even contrarian indicators are right all the time ;-)
Personally, I'm still in my "yen-carry" position (actually, short yen futures). Most of my profit is gone (I entered the position in January), but what bothers me even more than that is that I do not understand why. There is the explanation of hedge funds (and perhaps others) facing margin calls, and being forced to liquidate and exit their yen-carry positions. This involves buying yen with dollars, in order to pay out the yen loans. -- and this would strengthen the yen w.r.t. the dollar.
However I do not know if this is all, or some, or any of the reason that the yen has strengthened. As I said, events and yen-dollar exchange rates seem totally disconnected. Take today for instance - it became apparent overnight that the Japanese government is not going to do much about getting on with their banking problems -- and the yen surges 1.5 cents. Saywhat?
I am seriously wondering if I should stay in a position that I no longer seem to understand.
- Daniel
P.S. Cymeed, sorry for not answering your post #94 earlier. I think my answer to your question is, "I'm not sure I know" |
