Japanese Economic Pain Manifests in the Value of the Yen

For eight days in a row the United States Dollar has trampled the value of the Yen under it’s feet. Japan is hurting and we can clearly see it in the Forex market.

Another day like today will put the USDJPY over the 80.00 mark unseen since July.

Why is this happening? We have seen incredible U.S. news recently. Building Permits are at a 4-year high, the unemployment rate is the lowest in approx. 4 years, and consumer sentiment is at it’s highest since 2007. The United States Election is approaching quickly. It is possible that all of this good news is a Pre-Presidential Election Blip. It is also possible that all of this news means the U.S. is gaining economic ground.

The Yen on the other hand is experiencing the opposite. Yen Headlines look like or similar to these:

“Japan’s exports tumbled, gloom spreads before BOJ meeting”
“Can Japan Change”
“Japan Trade Hit by Europe Crisis, China Tensions”
“‘The Japanese yen is far overvalued given its economic conditions”
“Japan Exports Tumble 10%”
“Global economic woes weigh on Japanese exports”

Okay, you get the point. Things are not “looking up” for Japan. The bulls for the USDJPY are loving the attention though.

Prime Minister Noda of Japan ordered the government to create new stimulus by the end of November. The Bank of Japan (BOJ) increased stimulus in September also.

Recently, Japan exports collapsed over 10%. Exports to the European Union are said to have lowered 20% since last September. Exports to the United States have also fallen.

News to consider this week will include Wednesday’s FOMC Statement. It’s likely that nothing significant or major will be announced at Wednesday’s meeting, but if it is, the Forex market could become very volatile. The Fed may just keep their current 40 Billion/month pace with QE3. Being only 2 weeks out from the election, the FOMC event could be very tamed.

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