USD/JPY Crosses V EUR, GBP, AUD, NZD, CHF, CAD, MXN
The commonality in USD/JPY V its cross
pairs among the majors and MXN is all correlate solidly to USD/JPY at
upper 95% except CAD/JPY at 71% and 84% V AUD/JPY. Yet 84% is solid
enough and as good to highlight it belongs to USD/JPY. What's driving
correlations is all JPY cross pairs highlighted in this report trade
below significant break points. When USD/JPY broke its vital
break points, the new marriages occurred and what will change is again
important breaks. This means USD/JPY will own its cross pairs for at
least many months in the future if not more. At high 90%, this situation
could even last as much as one year. The market price will decide yet
this correlational situation is important as markets trade in a risk off
environment in a big way. Its DXY, fundamental news, Yellen and Fed
Funds that should drive these future correlational relationships
particularly now as DXY and EUR/USD are on the verge of significant
price breaks. The pair that changed drastically over past months
is GBP/JPY yet it deserves special attention since correlations
traditionally ran with GBP/USD at high 90's at least over the past year.
Why so special is GBP/USD lost correlations to the vast majority of its
major pairs except GBP/JPY. GBP/USD prices were driven
exclusively by its strong correlations to GBP/JPY. Now this relationship
is not only lost but other pairs are driving GBP/USD prices. My
suspicion is pairs like GBP/CAD, GBP/CHF, GBP/NZD are three prime
candidates as all three pairs become their traditional DXY pairs and
again confirms if I'm correct the non risk environment currently
trading. GBP/USD iremains a problem pair yet overall GBP/USD and the
market in total is looking for the impetus to get us moving and trending
again. The focus on MX/JPY is due to Mexico and Japan's economic
trading tradition that dates to the 1800's. Both shared a long standing
tradition as JPY and MXN commonalities was an exclusive relationship as
Silver currency pairs. The economic tradition continues today and seen
predominately in Japan automobile factories in Mexico but also in the
2004 Trade agreement signed between Mexico and Japan. Since 2005,
Japanese investments in Mexico total so far USD 16 billion while the
major investment was found in electric, auomoniles and auto parts.
Mexico exports to Japan USD 6 billion since 2005 while Japan exports to
Mexico USD 22 billion. Figures may be a bit light as reported by the
Mexico Office of Trade Agreements. While Japan manufactures auto parts
in Mexico, the parts are shipped back to Japan. Currently USD/JPY
trades below EUR/JPY, GBP/JPY and CHF/JPY and above AUD/JPY, NZD/JPY,
MXN/JPY and CAD/JPY. What is seen however is the commonalities in all
Jindividual PY cross pairs is all trade below significant break points.
NZD/JPY is the most interesting pair to focus as it sits near important
points while EUR/JPY is again in a 124 122 range and GBP/JPY in a 155
151 range. CHF/JPY is least favored as it sits dead inside a 108 115
range yet quick trade pportunities exist as prices become oversold and
overbouight inside the range. Highlighted are prices and vital break points. Take th breaks as they occurr.
EUR/JPY. Vital break points 124.29, 125.54, 125.98, 127.83. The list of
more vital points travels to 131's. Below point 122.34. Range 122.34
124.29. GBP/JPY. Vital break points 155.18, 161.63 then as the
same in EUR/JPY vital break points travel to 175's with many important
points in between. Below break point 151.37. Range 151.37 155.18. AUD/JPY. 81.27, 83.18, 83.52, 84.77 . Below, not sure here. Crisis lows in 2012 saw 76 80' s.
The 1 month average is 80.43 and 5 day at 80.87. Watch and trade based
on shorter 5, 10 and 20 day averages is best recommendation. This pair
deserves a much more analytical view. NZD/JPY. Current 73.76, next points above 73.87, 74.46, 75.89, 76.08, 76.85. Below 72.86 and 69.21. Range 72.86 73.87. CHF/JPY. From 111 currently, next 114.65, 114.91, 115.74 then below 108.72, 106.12, 105.16. Range 108.72 114.65.
CAD/JPY. Current 83.56, next point breaks above 84.27, 85.84, 87.46,
88.17. Below, good question. 83.14 is 4 month average, 83.09 is 5 day
average. 81.27 is monthly close November 2012. MXN/JPY. Current 6.05, next point breaks above, 6.31, 6.39, 7.05, 7.07, 7.09, 7.26, 7.33, 7.61. Most important point 7.33.
