Forex Trading: What’s Up With Yen Volume?

So now that even Mrs. Watanabe has decided that the road to prosperity is paved with yen shorts, USD/JPY and all its yen-cross buddies have duly turned around and headed south. This will no doubt alarm the equity bods, who tend to shiver when they see the yen strengthen. (Little do they recognize that the currency guys are watching stocks for clues to USD/JPY! It’s like something out of M.C. Escher.)

What’s interesting is that despite the yen’s strengthening, vols have barely budged- the remain at the bottom of the year’s range.

Is this a sign of positioning (every man and his dog owns long-dated upside), a sign of complacency, or a sign (like just about everything else these days) that it ain’t so bad and we should all buy stocks?

Inquiring minds want to know…

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Comment by Kiwi

2009-04-28 04:22:02

The COT charts say the US is long in AUD.
I have been short in AUDJPY all month.
The action is telling me that everyone else is short.
Have the Watanabes realized that 3% carry is trivial or just enough of them to offset the volume that is still stuck in long term drawdown?
I suspect the Watanabes are no fools.
If I had any stocks I would be happy to sell them to you.

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