Yen vs. Dollar
One of the most discussed issues in Japan is the strong yen against the US dollar.
It was 100 yen vs 1 dollar around 2008, but now it is 77 yen vs $1.
A Japanese product that sold at $7,700 in the US market in 2008 is now priced at $10,000, if any, in the U.S., in theory.
But, the American dollar is getting stronger against euro and other currencies of emerging economies, such as South Korea, India, Brazil, and South Africa. It gets weaker only to the Japanese yen. But why?
One factor is the 2008 Lehman Shock. Japanese banks and other financial institutions suffered relatively minor damage, but American and Europeans banks were hit so hard. The present Greek crisis is one of the direct aftermath of the 2008 Wall Street debacle.
Even in half-year results of this fiscal year, the three major banking groups of Japan, Mitsui Sumitomo, Mistubishi UFJ, and Mizuho groups, recorded $17 billion profits in total. The Japanese financial sector is in a comparatively sound state to a surprise of world citizens.
But, in the U.S., though $1 trillion infusion by FRB into Wall Street has well supported American banks, the number of those fired from Wall Street since 2008 is expected to reach 32,000 soon. Besides, various regulations newly introduced after 2008 have come to suppress profitability of Wall Street businesses. The climate in the US financial sector is not bright.
This is one of major reasons why the yen is appreciated high against the US dollar.
Another factor is the difference between US Treasury yields and Japanese Government Bond yields.
Beyond interest rate expectations, it will be important to watch relative moves between US Treasury yields and Japanese Government Bond yields. The correlation between yield spreads and the USDJPY itself remains quite strong, and it may be especially important to watch Treasury yields as they approach significant support. The 10-year yield currently sits at 3.15 percent—matching 6-month lows set in March. There is little in the way of further support beyond 3.15 until 2.75 percent, and a 40 basis point drop in yields would likely lead to important USD weakness versus the Japanese Yen.http://finance.yahoo.com/news/US-Dollar-Japanese-Yen-fxcm-3490155007.html?x=0
(to be continued...)
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It looked so foolish and crazy that Americans faced the subprime mortgage crisis. Till September 2008, the unemployment rate in America was around 4.5%; after it almost 10% and still 9%.
But, it is also so foolish and crazy that Japan has faced the unbelievable Fukushima Daiichi nuclear accident. Even residents in some part of Tokyo, with dosage measurement tools in their hands, are checking a radioactivity level around school and public parks where their children spend much time.
However, it looks so foolish and crazy that Europeans have faced the Greek Crisis in this year, asking financial aid of China governed by the Chinese Communist Party.
Apparently, mankind has gone out of an allowable range of the God in terms of freedom and economic activities. So, it is very likely that the history of mankind might enter another Middle Ages the first of which started with the fall of the Western Roman Empire.
Mat 10:27 What I tell you in darkness, that speak ye in light: and what ye hear in the ear, that preach ye upon the housetops.
Mat 10:28 And fear not them which kill the body, but are not able to kill the soul: but rather fear him which is able to destroy both soul and body in hell.