Re-visiting the weakness in Yen

This chart shows the percentage that the USD/JPY is trading above its 200 week moving average.

The extension that we are seeing currently is quite a rare moment.

Many of the previous percentage peaks coincided with the currency cross simultaneously touching 2.5 standard deviations above its rolling weekly mean and it registered a weekly Overbought reading.

October 22, 2022

by Rob Zdravevski

Karri Asset Advisors

rob@karriasset.com.au 

The effect of currencies on income statements

And the corporate effect of what todays earlier currencies post translates to…..

Aussie companies selling products into Europe, the UK and Japan have been seeing weaker receipts, while those selling to U.S. customers or in USD denominated products (commodities) are booking handsome profits on favourable currency differentiation.

Japanese and European assets are considered cheap for holders of Australian Dollars while Americans (and their corporations) may see Australian assets as being ‘on sale.

Expect those respective benefits to wane while these ‘extreme’ currency movements correct and consolidate.

On a side note, the almighty strength of the U.S. Dollar seems to be a surprise……

2 years ago, I wrote this note when I remember reports of the pending death of the U.S. Dollar to be palpable.

Today, there doesn’t seem to be an opposite case against the bullish prospects of the U.S. Dollar.

September 12, 2022

by Rob Zdravevski

rob@karriasset.com.au

AUD high against Yen, Euro and Sterling

It is an appropriate and strategic moment for Australian Dollar importers and/or speculators to sell (a tranche of their intended or required) AUD and use it to either buy Euro (EUR), British Pounds (GBP) or Japanese Yen (JPY).

The (multi-timeframe) bullish trend for the AUD (against these currencies) remains intact as they register 5-7 year highs against these crosses.

It’s more perverse that the AUD is weak against the USD….and whilst it finds a floor, a rise in the AUD/USD (DXY is Overbought) will aide a few more percentages for an additional tranche of buying more EUR, GBP or JPY.

September 12, 2022

by Rob Zdravevski

rob@karriasset.com.au

Looking for peaks in equity markets

In the chart below, the vertical lines show the significance when the Japanese 10 year bond yield is (on a weekly chart) simultaneously Overbought and trading 2.5 standard deviations above its rolling weekly mean.

The S&P 500 then reaches a meaningful, long term peak.

There have been 5 notable moments over the past 15 years.

The most recent peak coincided with my December 28, 2021 newsletter citing the same point.

https://mailchi.mp/karriasset/a-distorted-sp-500-amongst-extreme-peaks.

August 6, 2022

by Rob Zdravevski

rob@karriasset.com.au

Currency Trade Ideas

This week and today, we are also seeing an extreme in the U.S. Dollar (DXY) Index and as a result certain currencies are exhibiting notable weakness, which I think translate into an attractive buying opportunity.

My three strategic currency ideas are;

Sell USD and Buy EUR (current price is 1.1210)
– Once the Euro’s have been bought, I’m waiting for some specific stocks prices. Some on my list include SAP and ArcelorMittal.

Sell USD and Buy JPY (current price is 115.40)
– there are some Japanese equities on my buying list.

Sell USD and Buy SEK (currently 9.1130)
– Swedish equities have already rallied and benefitted from a weaker currency. The likes of Sandvik, Atlas Copco, Swedbank and Assa Abloy. The laggard is airline, SAS. This strategy is more applicable for those need to Buy Krona for corporate and business purposes.

The GBP (versus the USD) isn’t quite there. 1.3260 could be the place to buy Sterling.

November 25, 2021
by Rob Zdravevski
rob@karriasset.com.au

Watching correlations

Yesterday I posted charts showing the correlation between the

a) AUDJPY vs U.S. 10 year bond yield

and b) AUDJPY vs the CRB (commodities) Index

Today (below) you can see how a) Copper vs AUSUSD

and b) Copper vs the U.S. 10 bond yield are ‘tracking’ each other.

September 7, 2021

by Rob Zdravevski

rob@karriasset.com.au

My confusion about Japan

 

If I “umm” and “ahh” long enough about something, my instinct tells me to stay away, especially when pondering about taking a trading position.

The longer that I look at Japanese politics and its economy, I can’t help conclude that’s it’s not a place to invest. I won’t fill this blog with stats in trying to prove my case. There is plenty of data covering Japan available for analysis.

Confusingly, Japan has suffered 20 years of deflation and at some point assets in that country should reach a point of being cheap. After all, it has iconic companies and brands that still have global marketshare and impact.

Yet, Japan has had 6 Prime Ministers in 6 years, it’s 10 year government bond offers a yield below 0.90% and it’s currency (Yen) is near its all-time high.

Why would you own these bonds and Yen?

“Umming” and “Ahhing” can help in telling you when to stay away but if the move in the pendulum is at such an extreme and fundamentals don’t warrant such a swoon, then rather than “watching”, a trade towards a reversion to the mean is worth a look.

What if the Yen weakened significantly and the yield on its 10 year bond tripled?

 

 

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