The Japanese yen has traded very choppily lately, but remains below its October 24 highs where the low-yielding currency ran into critical resistance versus most of the majors.
One of the key tools to gauge the consistency of the trend for the Japanese yen has been the US stock markets, and the inverse correlation between the Dow and the yen (and US dollar) has been something we’ve been noting frequently. Friday’s price action was a perfect example of this, as the yen ended the day up 1.8 percent against the euro and more than 3 percent versus the Australian dollar and New Zealand dollar while the Dow plunged 3.82 percent by the end of the day. Going forward, I think this correlation will hold and the odds are in favor of additional Japanese yen strength.
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