While my (our) focus was in Europe and the United States, the Japanese Yen broke a lifetime high against the US dollar at 75.31 which triggered a unilateral (not joined forces of Central Banks) intervention by Japan.
Hence, the US dollar index rose from 75.19 to 76.40 within 2-3 hours. As a result, high yield assets like equities, commodity currencies and commodities fell. Though this event was on my lookout list, it certainly was off my radar. Hence the saying, expect the unexpected.
Now we have to wait the investors’ psychology on which event will weigh heavier. That is, the euphoria of ‘resolved events’ in Europe and better US data or the US dollar strengthening as a result from a weakening Yen which triggers unfolding of carry trades.
Thanks to the intervention, I had made a small profit today:
ReplyDeletehttp://tradingeducationprogram.org/2011/10/31/quick-profit-of-usd1050-04-from-usdjpy/