Tuesday, November 07, 2006
A Note on the Yen
As you know I am basically bullish on the dollar-yen. Yesterday the market moved above the 118.10 level early in the day so I concluded that the yen had started its move to 121.00. But today the yen has moved decisively back below 118.10 so I am going back to my original downside target for the reaction at 116.10.
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Your opinions are generally good and well thought out. On EURUSD and USDJPY views, if you expected EURUSD to rally hard towards 1.2930 and USDJPY to rally toward 121 (your previous view), then the so-called EURJPY cross would be around 155-156, something which most FX traders would have a hard time believing, given that the yen is tremendously undervalued against both USD and EUR, and there might be some intervention going on. Your bearish USDJPY view now might in fact be more consistent with a more general bearish USD view into year-end.
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