Wednesday, March 16, 2011

HUGE Rally in the Yen (FXY)

The sell-off in USD/JPY this evening is one of the top 5 largest moves ever for USD/JPY.

This is a huge rally in yen: up over 3 percent today.

There are a lot of people who plan their lives around the yen never going up this much. They short the yen and buy other stuff (e.g. risky/junk assets and currencies). They may be forced unwinders tomorrow. Could be ugly.
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5 comments:

  1. Joe NelsonMarch 16, 2011 at 3:45 PM

    What do you think might get hit with a sell off? The hot money spots of the last 6 months?

    ReplyDelete
  2. CPMarch 16, 2011 at 3:47 PM

    I am looking at the 13Fs of known Yen abusers.

    But, yes, the hedge fund hotels and carry trade assets.

    I would call for a "crash watch" - this could potentially create a lot of volatility and forced unwinding.

    ReplyDelete
  3. CPMarch 16, 2011 at 4:41 PM

    http://slopeofhope.com/2011/03/ok-so-now-what-do-we-do.html

    ReplyDelete
  4. anony mouseMarch 16, 2011 at 5:46 PM

    I didn't think this was as popular anymore because the spread was much lower than 2007-2008.

    PS, where is our favorite levered long whydibuy? Notably quiet these last few days.

    ReplyDelete
  5. CPMarch 16, 2011 at 5:55 PM

    I think it's still a 5% spread vs AUD, but I'm not a carry trader.

    I'm not sure he ever responded to the request for everyone's favorite long idea.

    ReplyDelete