Trading a Falling Yen

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The Japanese economy has been asleep for two decades after a real estate and stock market bubble and subsequent crash. The combination cause and effect has been an overly strong Yen. In regards to currency trading, why is the Yen considered a safe haven currency? The Yen has been strong, overly strong, as a result of the deflation at home as well as the monetary policy pursued by Japan. However, this policy has made Japanese products overly expensive and hurt the export driven economy. Today things are changing in Japan as Japanese Prime Minister, Shinzo Abe is following a three pronged policy to get the Japanese economy moving again. Part of this policy is to double the money supply by next year. The Yen has fallen twenty percent since the first of the year. Trading a falling Yen is new territory for the majority of Forex traders. Trading a falling Yen can be profitable, or not, depending on how well one carries out fundamental analysis of Forex pairs as regards the Yen and other currencies. And, success in trading a falling Yen will depend on technical analysis of major Forex currencies as other nations adjust their monetary policies in order to protect their respective balances of payment.

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Trading a Falling Yen

  1. 1. Trading a Falling YenBywww.TheForexNittyGritty.com
  2. 2. The Japanese economy has beenasleep for two decades after a realestate and stock market bubbleand subsequent crash. Thecombination cause and effect hasbeen an overly strong Yen.www.theforexnittygritty.com/forex/trading-a-falling-yen
  3. 3. In regards to currency trading,why is the Yen considered asafe haven currency? The Yenhas been strong, overly strong, asa result of the deflation at homeas well as the monetary policypursued by Japan.www.theforexnittygritty.com/forex/trading-a-falling-yen
  4. 4. However, this policy has madeJapanese products overlyexpensive and hurt the exportdriven economy.www.theforexnittygritty.com/forex/trading-a-falling-yen
  5. 5. Today things are changing inJapan as Japanese Prime Minister,Shinzo Abe is following a threepronged policy to get the Japaneseeconomy moving again.www.theforexnittygritty.com/forex/trading-a-falling-yen
  6. 6. Part of this policy is to double themoney supply by next year. TheYen has fallen twenty percentsince the first of the year. Tradinga falling Yen is new territory forthe majority of Forex traders.www.theforexnittygritty.com/forex/trading-a-falling-yen
  7. 7. Trading a falling Yen can beprofitable, or not, depending onhow well one carries outfundamental analysis of Forexpairs as regards the Yen andother currencies.www.theforexnittygritty.com/forex/trading-a-falling-yen
  8. 8. And, success in trading a fallingYen will depend on technicalanalysis of major Forexcurrencies as other nationsadjust their monetary policies inorder to protect their respectivebalances of payment.www.theforexnittygritty.com/forex/trading-a-falling-yen
  9. 9. Japanese Fiscal and MonetaryPolicywww.theforexnittygritty.com/forex/trading-a-falling-yen
  10. 10. For years after the Second WorldWar Japan encouraged savings byits people. This resulted in largebank accounts and lots of moneyto lend in Japan.www.theforexnittygritty.com/forex/trading-a-falling-yen
  11. 11. It was, to a degree, the cause ofthe excessive buying of propertyand stocks that lead to the crashtwenty years ago. Since that timeJapan has been trapped indeflation in which the Yen hasbeen overly strong.www.theforexnittygritty.com/forex/trading-a-falling-yen
  12. 12. This has hurt exports, production,and employment. The policy bythe new government is meant tocorrect labor laws as well asimport rules to make theeconomy more efficient andcompetitive.www.theforexnittygritty.com/forex/trading-a-falling-yen
  13. 13. In addition, increasing themonetary supply is meant toreduce the value of theYen, which it has, and increaseexports which have gone up.www.theforexnittygritty.com/forex/trading-a-falling-yen
  14. 14. The previously moribundJapanese economy rose at anannualized rate of three and a halfpercent in the first quarter of theyear.www.theforexnittygritty.com/forex/trading-a-falling-yen
  15. 15. The third leg of the stool is greatlyincreased government spendingmeant to stimulate the economy,add jobs, raise wages, and furtherraise economic production. If theentire package works, traders willlikely be trading a falling Yen foranother year or so.www.theforexnittygritty.com/forex/trading-a-falling-yen
  16. 16. Profiting from Trading aFalling Yenwww.theforexnittygritty.com/forex/trading-a-falling-yen
  17. 17. Profitable tips for Forex daytrading include following thepronouncements of governmentofficials and central banks.www.theforexnittygritty.com/forex/trading-a-falling-yen
  18. 18. Although the fundamentalseventually set Forex prices,market sentiment is greatlyswayed by the Forex news andpredictions that drive prices.www.theforexnittygritty.com/forex/trading-a-falling-yen
  19. 19. Traders will want to cash in onthe trend as the Yen continues tofall and be alert for a turn aroundwhen the policy runs its course orwhen politics change in Japan anddrive the Yen back up.www.theforexnittygritty.com/forex/trading-a-falling-yen
  20. 20. Trend trading, scalping, andchannel trading will apply intrading a falling Yen.www.theforexnittygritty.com/forex/trading-a-falling-yen
  21. 21. As always do your ownfundamental analysis, keepabreast of market sentiment, andwhen you do not understand themarket sit on the sidelines andwatch instead of guessing andlosing your trading capital.www.theforexnittygritty.com/forex/trading-a-falling-yen

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