Loading ...JPY USD Nikkei
Chart below is indexed from Jan 2007.
It seems to me from the chart below that something has to give since the JPY/USD Nikkei have generally moved upward together since the beginning of this year?
I’m not sure of the WHY, but it appears to my untrained eye that the price of gold is somehow a function of the dollar/Yen exchange rate and Japanese equities. Any experts here with thoughts on this? Could the Fed have been exchanging QE dollars for yen (equity purchases) 2009-2012 to keep it afloat and 2013-2016 (Fed taper but Abenomic yen printing took over equity purchase). Then with 2016’s NIRP (mkt confidence shock & gold spike). If this idea has any merit, the next question is who’s balance sheet is going to support Japanese equities going forward?
A noteworthy article at ZH.
It also appears to me that the direction of the Nikkei will coincide (inversely) with where PM’s are headed – US equities (Dow/Gold) that’s a side show, it seems to me for those interested in PM’s, it’s all about the Nikkei. Thoughts….?
Thank you!
You are right of course YYZ that the Nikkei and the yen usually are negatively co related.
So IF the YEN AND GOLD ARE STRONGLY CO RELATED ..gold should go counter to the Nikkei
I have never hear a satisfactory reason for Gold and the yen to be so precisely joined…But they sure are.
I believe it has to do with a hedging strategy for the USDJPY carry trade. Institutions take out loans in yen at 0%, buy US assets with a positive yield, requiring them to purchase USD with their yen loan. So the dollar gets strong vs JPY, but when the market turns risk off, USD assests are sold, and gold is purchased as part of a hedging strategy. I don’t know much more than that. But that seems to explain it.
So theoretically, if you expect rates in Japan to rise in the medium -long term, you’ll expect a dampened carry trade which results in a stronger JPYUSD. And that also equates to higher gold prices.