RetireJapan

What do people think, are we about to break ¥150 to the dollar?

https://twitter.com/fujimaki_takesi/sta ... 1388569865

I don't think anyone can predict that accurately

Yes, it is (again).

Just imo.

I don’t expect it to move in a straight line though. Before year end I think the yen may get a bounce from speculators taking some profits.

Interestingly the high deficits in the US are coming into discussion more in recent days, but Japan already has a lot more debt accumulated.

More than 150, I am watching the yen gold price. It made new all time highs last evening.

I’d venture a yes to it moving past 150 but I no longer back my thoughts with a trade. I shorted the yen a few times via YCS in the past and while it was a good trade, I gained more than a few grey hairs due the anxiety. Currency trading is not for me. But watching the erosion is painful. It was 75 when I moved here. Good incentive to get invested vs let your money sit in a bank.

My prediction (which is worthless) is that the Yen will hold at just under 150 for a while as the BOJ continues to defend it but will ultimately breach that threshold and then will rapidly whipsaw around between 150 and 200 as the currency markets try to find a new equilibrium - after that who knows but I hope for a mean reversion back to 100-110 someday. Anyway, whatever happens, the only answer is to be diversified across assets and currencies.

A next target will be 152, above where it peaked this time a year ago.

Some good news though, is it looks to be more a case of US dollar strength today, than it is yen weakness. (Although I guess the MOF people only care for the USD/JPY rate.)

This is interesting, especially for the yen bulls: https://www.ruffer.co.uk/en/thinking/ar ... ent-review

The TLDR version of Ruffer...

"I'm not wrong, I'm just early"

favourite refrain of fund managers everywhere who got it wrong.

Had never heard of this guy myself until today. But the thing I like about his thinking (even though I am going in the direction of the trend) is how he suggests that domestic players may be forced into buying back yen and JGBs to take up the BOJ slack.

I can’t remember the details but there was this episode in the last when the BOJ and GPIF coincidently made offsetting policy changes on virtually the same day.

This might be the type of special arrangement hinted at, and I’d not put it past the government to meddle with the GPIF portfolio asset allocations for purposes other than the best interests of pension recipients.

I don't think GPIF is used as a political tool for manipulating forex markets. In fact I am completely sure it is not.

The point about speculators is also pretty moot. The whole world knows BoJ is on the cusp of accelerating the tightening they started almost a year ago now when Kuroda let the YCC band expand. It isn't like the global hedge fund community is blithely unaware of what is likely to happen. Ruffer is talking out of his arse on this one.

But, what is undeniable is yield seeking Japanese organisations - pension funds, life insurance companies and banks will absolutely switch from foreign bonds to JGBs when the yield differential (after hedging costs of course) makes sense to do so. This will involve selling USD/EUR/whatever and buying JPY when the trigger point is reached. But again, this is no secret and pretty well understood in the market.