Wednesday, January 25, 2012

Sign of the New Troubled Times: Japan Posts a Very Rare Trade Deficit; First in 32 Years

This might as well go in the "shocking" category, as it is a very rare event. Japan has registered its first annual trade deficit since 1980.

As a result, the Yen dropped to one-month low against the dollar and the euro. Currency traders and speculators may unwind bullish bets on the currency.

Reuters: "Traders cited robust offers from Japanese exporters from 78 yen up to 79 yen although many expect selling in the currency to gather pace on steady unwinding of yen long positions placed by speculators, with model and macro funds also keen to sell.

In the options market, dollar/yen one-month risk reversals moved to 0.8 in favour of dollar calls, around the strongest dollar bias since 2003 and indicating some more gains for the greenback. Implied vols ticked higher but remained subdued at around 8 percent for the one-month."

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