USD/JPY is on a tear this morning following the better than expected jobless claims report. I think traders are relieved that the deterioration in the labor market can officially be blamed on Mr. Frosty because jobless claims have reverted back to pre-snow storm levels. Although I am worried by the sharp rise in the number of people receiving extended and emergency unemployment benefits, that is clearly not what the market cares about right now.
USD/JPY is trading off U.S. rates (yields) and not stocks. The following chart shows the strong relationship between USD/JPY and the 10 Year U.S. Treasury yield. This relationship holds for shorter term yields as well like the 2 year bond yield
I was on Fox Business this afternoon talking about the overstretched positions in the euro and British pound as well as the outlook for the ECB, BoE and Non-farm payrolls report
The WSJ and the Financial Times are crediting the drop in the British pound to the upcoming election. Worth a read though I still think that its more than just politics because politics have been in the background for the past few months. If you haven’t read it yet, read my piece on 5 Reasons Why the British Pound is Being Pounded
The political debate has also turned darker now that the quagmire that would be caused by a hung Parliament is considered a realistic possibility after the coming elections. In such a scenario, the winning party still doesn’t have sufficient Parliamentary support to carry out its legislative agenda without help from other parties.
The postelection stakes are large. Credit-ratings agencies have warned the U.K. it could lose its top-notch triple-A rating if the winner of the next election fails to offer a credible plan for fixing the nation’s finances. Any new government plan must address what looks like a still-fragile national economy.
I was on the Business News Network this morning talking about my reaction to the Australian rate hike, the IMF’s report on Chinese Yuan undervaluation and my outlook for the Canadian rate decision
Kathy Lien is employed as Co-Head of Global Research for Global Forex Trading, a division of Global Futures & Forex, Ltd. (GFT). However, the KathyLien.com web site is maintained by Kathy Lien personally, and is separate and independent from her employment with GFT. GFT does not control the content of the KathyLien.com web site, and opinions expressed by Kathy on the KathyLien.com web site are not necessarily the opinions of GFT.
March 4, 2010 
Posted in 2009 japanese yen, 2009 japanese yen forecast, usd/jpy 
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