Japan Does It Again!

Earlier this morning, the Bank of Japan again intervened in the currency, selling Yen which caused it to weaken. As I mentioned yesterday, the market may have been trying to test the BOJ as most of the country is away from business on holiday.
In the Euro zone, German business confidence came in better than expected for the current assessment, but slightly lower for the future outlook.
In the US, durable goods orders came in lower than expected on the headline number, showing a decline of 1.3% vs. an expected decline of 1%. However stripping out transportation, the figure rose to 2% vs. an expectation of a 1% gain, providing a silver lining. Later this morning, new home sales will be out which are expected to be higher than last month.
So this morning there is noticeable risk appetite in the market as European stocks and US equity futures are higher, highlighted by Dollar and Yen weakness due to the BOJ intervention.
Earlier, gold reached $1300 as it has been trading more like a safe haven currency than a physical commodity.
In the forex market:
Aussie (AUD): The Aussie is higher this morning as the Bank of Japan is practically begging investors to put on carry trades and in the process weaken Yen. OK BOJ, if you say so!
Kiwi (NZD): The Kiwi is higher as well for the same the reasons as Aussie, though gains are slightly less after the recent GDP reports which did not meet expectations.
Loonie (CAD): The Loonie is actually the largest gainer this morning as oil prices have rebounded to 75.75 and Yen intervention is stoking fears that the US Fed may act to weaken the US dollar further through quantitative easing. (Click chart to enlarge)

Euro (EUR): The Euro is up this morning on German business confidence figures which reached a 3-year high, as well as French GDP figures and Italian retail sales figures that came in slightly higher than expected. The Euro stands to benefit further should the US dollar continue to be weak, and as long as the debt crisis remains under control. (Click chart to enlarge)

Pound (GBP): The Pound is also higher as money flows are making their way out of the Dollar and Yen. There is no other economic data for the UK today so expect it to trade as a greenback alternative.
Dollar (USD): The Dollar is weaker as the Durable Goods Data was seen as largely positive, further encouraging the risk-taking that got started by the Bank of Japan. New Home Sales are due out later this morning and the market is expecting an increase from last month’s dismal numbers.
Yen (JPY): The Yen was weaker this morning on BOJ intervention despite being on holiday, although government officials would not confirm that’s what took place. However, all of the gains have been given back and one must wonder how much more selling the BOJ is willing to do. (Click chart to enlarge)

The Bank of Japan and the US want you to earn more interest! Just don’t go looking for it in either of their respective banking systems. The way to earn that interest is to sell both Dollar and Yen and buy higher yielding currencies like the Aussie, the Kiwi, the Rand, and even some of the exotic currencies in emerging markets.
Just whatever you don’t buy Dollars or Yen! Suspend your disbelief that the global economy is sound and that global risk is non-existent. Use gold and the Swiss franc as a risk proxy as both the US and Japan are about to speed up the race to the bottom.
There are many more attractive economies around the globe right now and diversifying into some of them and being compensated to do so is a win-win for investors.
If you are not taking advantage of the global currency market and the fact that both the US and Japan are practically BEGGING you to sell their currencies, then your future as an investor may be limited!
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
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