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Currency Currents

Currency Currents

Wed, Jun 18 2008, 18:12 GMT

Black Swan Capital

Risk vs. Reward: A Decent Set-up with USDJPY?

We’re wondering: How credible is the Japanese yen risk-aversion play? Stocks have been less than stellar lately yet the yen has pretty much been sliding against the buck. That’s not exactly how it worked when subprime, credit crunch and writedowns were the new buzz words on Wall Street.

But today the yen is giving us a little taste of old – stocks are weaker and the yen is firming up. But then again, today’s yen strength could be mostly technical. The dollar/yen pair is butting its head on overhead resistance. After the run it’s had since the middle of March, a bit of a corrective move (at the very least) seems in order.

And while the yen’s yield differential is not improving amidst an environment focused on inflation, a break above the key USDJPY level could hit the yen hard and quick.

Still, in the short-term, we think playing the short side of USDJPY represents a decent risk-reward set-up.

Regards,

Black Swan Capital LLC

• Black Swan Capital - Currency Snapshot 6/18/2008

Published on  Wed, Jun 18 2008, 18:15 GMT

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Black Swan Capital LLC  | 2161 SW Racquet Club Drive Palm City, Florida 34990
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