A Big Picture View of YEN and YUAN is Quite Revealing

A Big Picture View of YEN and YUAN is Quite Revealing

3 June 2016, 06:55
Roberto Jacobs
0
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A Big Picture View of YEN and YUAN is Quite Revealing

I just wanted to update the interesting comparison chart of the USD vs YEN (upper chart) and the USD vs. YUAN (lower chart).

Most conspicuous is the resumption of USD weakness-- YEN STRENGTH-- as of the May 30 USD recovery rally vs the YEN to 111.45 from its early May low at 106.14.

My work is warning us that the dominant, year-long downtrend in USD/YEN has resumed, and should push the currency pair to new lows into the 102-100 target zone.

If accurate, this represents stressful YEN appreciation for Abe and the Japanese economy that needs a weaker, rather than a stronger currency.

Meanwhile, let's also notice that the USD has been steadily appreciating against the Chinese YUAN (YUAN is declining in value) since mid-April, and is poised for directional continuation towards reaching its upside potential out of a five-year base formation that points to 7.00 next.

Bottom Line: not only is the YEN rising, and squeezing the Japanese export machine, the YUAN is depreciating too, making life doubly difficult for the Japanese.


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