Wednesday July 26, 2006 - 10:15:12 GMT
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Black Swan Capital - www.blackswantrading.com
Is the yen trading cheap?
â€śMr Chakrabortti (JP Morgan analyst) thinks economic data can be used to identify turning points in the equity-bond relationship. He says the important variables for relative performance of equities and bonds are the production component of the purchasing managersâ€™ (ISM) survey of the manufacturing sector, initial jobless claims and consumer confidence. Given that the ISM survey has been weakening and consumer confidence is below its April peak, Mr Chakrabortti prefers bonds to equities during the next six months (both might underperform cash).â€ť
Phillip Coggan, The Short View (FT)
FX Trading â€“ Is the yen trading cheap?
Is it a re-rating of the Aussie economy, or at least the Reserve Bank of Australia? Is it disappointment over the Bank of Japanâ€™s modest perceived stance leading to yen carry-trade again?
Thereâ€™s quite a divergence between the yen and Aussie futures of late, as you can see in the daily chart below comparing the two series:
Push comes to shoveâ€¦it would seem with the relative re-rating of the Japanese economy versus our longer term expectation of a weakening US dollar on â€śgrowthâ€ť prospects, the yen looks cheap here.
Jack Crooks, Black Swan Capital Black Swan Subscription-based Service
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