By When it comes to the trading of the USD/JPY pair, investors may use different strategies for trading in the financial markets. For example, traders in the short term might want to to monitor treasury bonds for two years along with stocks. On the other hand, traders, in the long time, might want to take advantage of the bonds for ten to thirty years in the financial markets.
Kavan Choksi Japan- What should traders be aware of when they are trading with the JPY/USD pair
Kavan Choksi Japan is an eminent investor, business management expert, and wealth consultant known for his invaluable expertise in economics and finance. He has played an instrumental role in helping many businesses reap lucrative returns with their investments in the financial markets. He says that traders should be aware of the economic data and the news that impact the way stocks and asset classes respond to it in the market.
When it comes to the JPY/USD currency pairing, he says it is one of the most profitable currency pairings in the forex market. However, there are certain things that traders must take into consideration when they are trading in the financial markets with this currency pair. Traders should look at the S&P500 index to detect warning signs in any change of the correlations to the stock and the bond market when it comes to the USD/JPY pairings.
Reasons why changes in the correlations in this currency pair take place
The changes in the correlations in the pair might take place for multiple reasons; for instance, if the USA releases more debt through the sales of Treasury bonds to add money to the system, the prices for bonds will become diluted and have diverse effects on the USD/JPY pairing. Now the question is, what if the USA buys back these Treasury Bonds and adds it’s proceeds to the system? Does that indicate a positive correlation for the USD/JPY pairing?
The answer to the questions above is varied, and it is based on positive economic outlooks versus the environments in the globe that is facing recession. Several traders find the proposition of trading the Japanese Yen against the US dollar to be a complex affair. However, financial analysts state that the offer is relatively easy if one understands the Yen currency with respect to the treasury bonds of the USA, bills, and notes.
One must understand that the primary driver of this currency pair is not the Treasury bonds of the USA but the rates of interest in both the USA and Japan. This indicates that this currency pair is an evaluation of the risk that determines the market timings for buying and selling the USD/JPY with respect to the rates of interest. Financial analysts state that the direction of this currency pair is determined by their rates of interest.
According to Kavan Choksi Japan, it is essential for the trader to have in-depth knowledge about this currency pair. Though it is one of the most profitable currency pairs in the market, it is complex in operations too. Equipping yourself with financial education and knowledge is a prudent choice to make smart investments.