Getting to Know the JPY.

The yen is so hardcore that it didn’t want to be named anything else.

It came into the foreign exchange market called the yen and up to now, it is still called the yen.

The yen is the yen is the yen.

It is also tied in currency crosses, especially against the EUR, GBP, and AUD.

Traders love me like the Japanese love their sushi.

After the USD and the EUR, the JPY is the most heavily traded currency, with USD/JPY also ranking as the 2nd most traded currency pair.

Because of the role that Japan plays in international trade, there is a need for the JPY in order to complete international transactions.

Are you ready for the Asian Sensation?

When investors think of Asia, they subconsciously think of Japan.

With Tokyo being one of the world’s major financial centers, Japan is often representative of what’s happening in Asia.

Japan is normally a major trading partner of other Asian powers.

If businesses are doing well in Asia, this is normally reflected by the Nikkei, the major stock exchange in Tokyo.

I’m always on the go…

With Japanese reports coming out during the Asian session, it is only natural that the yen trading is active during the Asian session (0:00 GMT).

The yen can also be active in other sessions depending on what economic data is released.

This should be expected – it is part of Japanese culture, they do business around the clock!

…but I’m all for cheap thrills!

With many investors looking for the most bang for their buck, some have resorted to carry trade.

With the JPY having the lowest interest rate amongst the majors, it is normally used in carry trade as a funding source.

The Japanese tend to think alike.

Japanese asset managers tend to make the same investment decisions.

This leads to highly correlated positions, which means that it is likely to see trends develop.

I’m prone to breakouts…

One characteristic of yen pairs is their tendency to consolidate for quite some time, then break out in one direction, then consolidate once again, then break out once again!

Keep your eyes and ears ready because you never know when this might happen!

…and I have a love-hate relationship with China

With China emerging as a major power in the world, its influence on the JPY will continue to grow.

If signs point to further growth in the Chinese economy, it may affect demand for the JPY.

How so?

As we’ve said, China is one of Japan’s major trading partners.

Naturally, as Chinese businesses boom, they will need to order more from Japan.

This, in turn, would increase demand for the JPY, causing it to appreciate.

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