Trading The JPY
Trading The Japanese Yen (JPY): Japan, having the second largest economy in the world, behind the USA, has Bank of Japan is its central bank, established 127 years ago in 1882. It has been the subject of several revisions, in 1942 and following WWII several more amendments were made, the most important being the establishment of the Policy Board, headed by a Governor in charge of at least 15 other members that make contributions, sometimes more, as the highest decision-making body in 1949. Most recently the 1942 Act was completely revised in 1998 under two important principles – ‘independence’ and ‘transparency’.
Like the others major banks, it too determines guidelines for monetary and currency control, sets the basic principles for the Bank’s role in money market operations, including overseeing the function of its executives (excluding Auditors and Counselors). The Policy Board, Bank of Japan’s executive body, consisting of a Governor, 2 Deputy Governors, 6 other members of the Policy Board, 3 (or less) Auditors, 6 (or less) Executive Directors and a few Counselors; leans toward achieving economic stability in order to improve the development of the national economy and constantly exchanges views in regular meetings with the current administration in power as part of the effort of being seen to be upholding those important principles of independence and transparency and meets 12-14 times annually.
The Japanese yen (JPY) tends to trade under the identity of a carry trade component. With the low interest rate it offers, the Japanese yen is often the challenger against the higher-yielding currencies, particularly those of the Antipodes (and former British Commonwealth countries) New Zealand dollars, Australian dollars and above the Equator, the British pound. Swings can be inconsistent and unpredictable, forcing traders to take a more long-term view using technical perspectives. Average daily ranges can spread 30-40 pips, but there have been times when highs of 150 pips have been seen. As the Japanese yen is valued so much below the US dollar, a pip is considered to be worth 1% of a yen and so it is expressed only to two significant digits compared to the other base currencies expression to four significant digits. Catch the action of this feisty currency during the crossover sessions between London and the US that take place between 6am and 11am EST to experience ‘east meets west’ trade.
