Japanese Yen Acts As ETF Investors Warning Flag
November 15th at 1:00am by Tom Lydon
The sentiment of global investors can be seen through the Japanese yen, and watching the stocks and exchange traded funds (ETFs) that follow it. It seems that if investors are getting worried, the yen strengthens, and when investors are feeling risky, the yen weakens, reports Joanna Slater for The Wall Street Journal. On Tuesday, U.S. stocks surged amid falling oil prices, while the yen simultaneously weakened against the dollar. These movements are a result of Japan’s mega-low interest rates on global markets from New York to New Zealand.
The yen, a weaker currency has strengthened 11% against the dollar since the end of June. This is more of a measurement on how much risk is evident in the market versus a down outlook on the U.S. economy itself. Last week investors reduced their overall risk exposure and bought safe haven investments like U.S. Treasury’s, while the currency markets followed the same pattern, and reaction was to buy the yen.
The CurrencyShares Japanese Yen Trust (FXY) is up 5.6% over the past three months.
For full disclosure, Tom Lydon is a member of the board of Rydex Investments.
