from Follow the Money

Yet another reason to sell yen …

October 9, 2006

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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

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North Korea’s nuclear test.    

At least that is an argument for selling yen that has long made a certain amount of sense.  Some other arguments for selling yen are, well, a bit more creative.

Apparently – as Bill Pesek notes – strong Japanese growth is also now a reason to sell yen. 

And, for that matter, slowing US job growth is a good reason to buy dollars.

Sure, Friday’s report was ambiguous.   The number of jobs created in the past was revised up.  But directionally, there certainly was a slow-down in job growth in September. 

No wonder some now think a slowing global economy (due in part to a slowing US) is good for the dollar …

I understand now why fx forecasting is a hard job.    

Not so long ago, US growth was good for the dollar.  And Japan’s slump was bad for the yen.   Now, the opposite seems to be true.  A slowing US isn't bad for the dollar.  And Japan's renewed growth shouldn't stand in the way of the yen testing record lows ...

At least not so long as interest differentials are where they are.

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