The USD/JPY Currency Pair (U.S. Dollar / Yen) is the exchange rate of U.S. dollar expressed in Yen. It expresses the value of one U.S. Dollar in Yen.
The USD/JPY is the second most traded pair and represents 14% of the total number of transactions on the FOREX in 2010. From 2008 to 2010, the volatility of the Dollar USD / Yen has been about 115 pips.
The pair USD/JPY has also been influenced for many years by the phenomenon of the carry trade. Indeed, for many years, interest rates were kept at 0% by the Bank of Japan. Americans rates controlled by the Federal Reserve have them for many years been much higher than Japanese rates. As a result, investors sold the yen heavily to buy the American dollar which was more profitable.
However, with the crisis, the interest rate differential has narrowed considerably and the phenomenon of the carry trade is no more up to date on this pair. As a result, the yen has appreciated considerably due to the unwinding of carry trades. For a country based on exports such as Japan, this severely penalizes the country's growth.
Since its creation, the USD/JPY has ranged from 0.79 yen, lowest in 2010 and recently reached 140 yen in the early 2000s.
The pair USD/JPY is quoted in 2 decimal places but you can sometimes find 3 with some brokers. The exchange rate is floating and therefore subject to the law of supply and demand on the interbank forex market.
Both central banks linked to the pair Euro / yen are are the Federal Reserve (FED) for the USD and the Central Bank of Japan (BoJ) for the JPY. Like other central banks, the BoJ intervenes regularly directly on the foreign exchange market to control its currency. Thus, it is not uncommon to see significant upward and downward spikes on the pair reflecting an intervention by the BoJ to depreciate the yen in particular to make increase exports of the country.
The decisions taken by both central banks also have a strong impact on the evolution of the pair EUR / JPY (interest rate changes, asset buyback program ....)
Share your Analysis and your Trade Ideas : Forex
