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Forex Flash: Japanese Economic Minister pushes USD/JPY a point lower – Societe Generale

By FXstreet.com,  January 15, 2013, 09:55:00 AM EDT

FXstreet.com (Barcelona) - Sebastien Galey, Senior FX Strategist at Societe Generale notes the fear of imported inflation caused the Japanese Economic Minister to speak out to push USD/JPY one big figure lower.

He adds, "In an advanced 'carry' trade, such corrections are short and shallow. By that point in time, surviving algorithms have identified the trend and will bid USD/JPY on dips." Galy notes that inflows pressure price, creating a self-feeding loop. Macro investors are left to assess whether we are in a phase of consolidation or systematic trading has pushed the pair so far, it will collapse as happened with AUD/JPY in 2006 and 2007. He finishes by commenting, "Comparison though is no reason; a carry trade and a change in the expected equilibrium concept for USD/JPY are conceptually different."




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

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