You are here:

The USDJPY to S&P Correlation Trade

The USDJPY to S&P Correlation Trade

6 Years ago | January 29, 2014 00:00:00

by John M.Bland 

One hears a lot about how equity traders feel the value of the USDJPY determines the value of stocks. This is a correlation worth watching because we feel the causation tends to work in both directions.

The relationship goes back to a time when U.S.short-term rates were higher and Japanese interest rates were close to zero. Hedge Funds, who do leveraged trading, discovered they could borrow funds much more cheaply in JPY than in USD to make leveraged equity purchases. Of course by borrowing cheap JPY they took on an added forex risk to their trade. So they would borrow JPY at a low rate and then purchase U.S.equities.  Then when they exited their stock trade they would pay back JPY at the prevailing exchan

Please login to read full story. Register if not a member.

Archives 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013
The message from the founder

Click Here

Review our featured articles

Click Here

The Latest Articles
  • ECB extends its Easy Money policy Until Mid-2020. U.S. Jobs data Weak. More ..
  • “Transitory” Replaces “Patience” The New Fed Keyword More ..
  • PMIs Can Be A key To Your Trading More ..
  • Preview: U.S. Jobs Report for March 2019 Data. Due 5 Apr 19 @ 12:30 GMT More ..
  • Brexit Nowhere Near A Solution? More ..