Originally Posted by scorpion
What surprises me the most is USDJPY is still above 120. Isn't US dollar now at the weakest? USDJPY should be 103 by now not 122. Is BoJ behind all these attempts to peg its yen with dollar.
Hedge funds are involved in the yen carry trade where billions have been poured on US money markets after japanese chests have been cleaned ))
when, and not if, the markets really feel the US$ has some unbeatable headwind then you will start to see few of those hedge funds on the redeem side which will trigger a panic sell on US MM.... that s when US interest rates will soar as the yen index...that is also when few people will turn millionaire in a few days ... the problem is the following : Japanese are the most involved in the yen carry trade, as you know Japan is one of the biggest consumer when it comes to US trasuries...Iran is also talking about pricing oil in Yen!
that could be hot! there are many other things implied as well....like inflation in china that could trigger an asian interest rate party.... it s all in rate differential and how markets perceive this....