Excerpt from: “Crystal Ball for Investing and Trading” Book.
Status of USD/YEN
The other major Forex index is the US dollar against Japanese yen (USD/JPY). Comments related to EUR/USD also apply to USD/JPY. Figure 13.26 shows a monthly chart of USD/JPY from 1971 to March 20, 2020.
Figure 13.26 Charts courtesy of netdania.com
On the chart, we see that USD has been substantially depreciating against JPY from 1975 to 1995. This trend was mainly the consequence of removing the USD gold backing by the Fed. After that, USD/JPY was practically trending sideways from 2008 to 2012.
Mr. Abe, the prime minister of Japan since 2012, decided to pursue a policy called Abenomics through aggressive QE programs to depreciate JPY against the dollar. By depreciating JPY, he wants to promote the Japan’s exporting sector, and to import inflation. The up-trending wave from October 2012 to mid-2015 was partly the result of BoJ QE programs, and partly because of anticipation of rate hikes by the Fed.
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