Why are USD/JPY and EUR/JPY holding up better than one would expect given the global shift toward risk aversion? There seems to be one primary factor: Japanese retail investors have finally reversed their penchant to move money offshore and have turned positions to being net-long of JPY. Human nature would suggest when the “dumb money” is on board, there is only one way for the JPY to go, and that is down.
A drunken finance minister, a prime minister with approval ratings in the single-digits, those factors may be contributing, but the late arrival of “Mrs Watanabe” to the trade (the market’s derisive nickname for Japanese retail investors) seems to be the most decisive.
As an aside, dealers note talk of a double-no-touch strategy in play in USD/JPY with strikes at 87.00 and 93.00, a range that has contained the price action for much of 2009. USD/JPY trades at 92.00.
