24 Mar 2014
Yen - is it a sell or a buy? - FXStreet
FXStreet (Barcelona) - Alena Afanaseva, FXStreet Analyst comments that here is a wide-spread myth among FX investors that JPY rises every March thanks too national companies’ interest.
Key Quotes
“The main argument in favor of such theory is fiscal year end in Japan on March, 31st. Thus, the large amounts of money denominated in currencies of those countries where the factories of the Japanese corporations are located, are flowing back to native country in accounting purposes during this period.”
“Nevertheless, the statistics says the opposite. Actually, USD/JPY has been showing the rise by average of 1.2 per cent since 2005, i.e. the Yen has been weakening despite the expectations of the strengthening. However, if we look at the data more closely, and analyze the pair rate for every ten days of March, it may bring us to interesting conclusions.”
“As we see, during the first ten days of March the Yen usually loses approximately 1.7 per cent on average. However, we see JPY rising in 4 out of the last six years during the next 10 days, and it added only symbolic 0.1 per cent in 2014. And if we look at the exchange rate of USD/JPY during the last two years, the slide of the pair was more moderate in the second period of March than in 2009, and 2011, but in these cases we also saw the continuation of falling by 0.7 per cent during the third period of the month.”
“Thus, given the timid slide of the pair during the period from March, 10 to March, 20, we may await another move lower during the nearest week by roughly 0.7 per cent with the initial target at 101.60.”
Key Quotes
“The main argument in favor of such theory is fiscal year end in Japan on March, 31st. Thus, the large amounts of money denominated in currencies of those countries where the factories of the Japanese corporations are located, are flowing back to native country in accounting purposes during this period.”
“Nevertheless, the statistics says the opposite. Actually, USD/JPY has been showing the rise by average of 1.2 per cent since 2005, i.e. the Yen has been weakening despite the expectations of the strengthening. However, if we look at the data more closely, and analyze the pair rate for every ten days of March, it may bring us to interesting conclusions.”
“As we see, during the first ten days of March the Yen usually loses approximately 1.7 per cent on average. However, we see JPY rising in 4 out of the last six years during the next 10 days, and it added only symbolic 0.1 per cent in 2014. And if we look at the exchange rate of USD/JPY during the last two years, the slide of the pair was more moderate in the second period of March than in 2009, and 2011, but in these cases we also saw the continuation of falling by 0.7 per cent during the third period of the month.”
“Thus, given the timid slide of the pair during the period from March, 10 to March, 20, we may await another move lower during the nearest week by roughly 0.7 per cent with the initial target at 101.60.”