Understanding the Yen Carry-Trade

[CheapShot]

With all of the fluctations the way they have been the last week, I couldn't help but but start reading about what was causing it. Here are a few links that I thought were pretty good. The first one is reference YCT back on Feb 4th predicting some of the trouble we saw. The other is reference YCT back in June 2006, and the last link is reference COT Reports and how I beleive they are supposed to predict or fore warn what happened. I beleive it is the combination of the YCT Gap along with the extreme in the US Market whether a High or a Low that caused what happened. I guess the big question for all of those here on the MB, who are way a head of me in the knowledge base, is how to predict it.

http://hamzeianalytics.blogspot.com/2007/02/commodity-commentary-by-sally-limantour_05.html

http://news.goldseek.com/GoldSeek/1149783071.php

http://www.safehaven.com/article-2111.htm

 

[Oldcoin]

The Zen of Yen

http://tinyurl.com/2rd347

Updated: 05-Mar-07 10:16 ET


The market is obsessed with several issues. One is the yen strengthening against the dollar. The idea is that a stronger yen forces some hedge funds to sell U.S. stocks. This is because those hedge funds borrowed yen at low interest rates to buy U.S. stocks. The stronger yen makes those loans more expensive to pay back in U.S. dollars, so the hedge funds sell stocks to close that position.

 

[Oldcoin]

Another great forum possibly tied to the use of foreign currency carry-trading.
http://www.tsptalk.com/mb/showthread.php?p=81968#post81968

You might be right, but oh what a tangled web.