Concerns about the global economy are weighing down the U.S. dollar, as it fell to its lowest levels against the Japanese yen in more than five months, impacting yen-related exchange traded funds (ETFs).
The Japanese yen has been on an upswing in recent weeks as investors search for the safest assets. Deborah Levine for MarketWatch reports that the overall sentiment over the global economy, mixed with down Japanese data has been causing the yen to rally.
The Macro Trader on Seeking Alpha reports that although inflation will not be here tomorrow, governments have printed lots of currency. Until that money is circulating, the super inflation many anticipate will not kick in. Rather than seek the Japanese yen for its usual carry-trade appeal, many are turning to the yen as a safe haven from inflation.
Macro Trader notes that each time investors have fled risky assets such as stocks and corporate debt, they have flocked to the yen (among other things) as an alternative. The currency and fixed income markets are good indicators of high and low risk and could be a part of your strategy and trend following plan in tumultuous times.
- CurrencyShares Japanese Yen Trust (FXY): up 7.2% over three months
- WisdomTree Dreyfus Japanese Yen (JYF): up 7.2% over three months
For full disclosure, Tom Lydon’s clients own shares of FXY.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.