Quotable
What we're really talking about is a wonderful day set aside on the fourth Thursday of November when no one diets. I mean, why else would they call it Thanksgiving?
-Erma Bombeck
FX Trading – Risk Returns; Give Thanks for Turkey
How about that Japanese yen? Subprime losses and an unforgiving credit market are really poking investors in the side and driving money back into the yen.
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And a streak of global equity market sell-offs is expected to push the yen even higher against the dollar.
Hopefully you’ve been investing in currencies like the yen, because as of yesterday, investing in the S&P 500 has gotten you nowhere. The S&P 500 knocked out all that was left of its 2007 gains in its pre-holiday trading session.
But you might wonder if this risk-aversion surge is going to let up anytime soon.
Maybe a picture can tell the story ...
Japanese yen cross rates have been highly correlated to global equities lately. After the last couple days, global equities haven’t been very forgiving to the Australian dollar. Take a look at the Aussie versus the yen on a weekly basis …
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Technically, many of the high-flying currencies appear vulnerable to an extended period of risk-reduction. The Aussie in particular is at levels where a breakdown could lead to extensive downside.
Be careful out there, and enjoy your turkey!
Happy Thanksgiving!
John Ross Crooks III
Black Swan Capital
