USD/JPY Live Chart

The USD/JPY pair has many nuances that makes it one of the more vibrant major pairs. When you think of Japan, the first thing that should come to mind is the export market. Many of the world’s major electronic companies come out of Japan, as well as auto manufacturers. Some of the most iconic brands in the world such as Sony, Canon, and Honda all called Japan home. As an export driven economy, the Japanese actually prefer a softer Yen, as it allows for Japanese products to be purchased for less overseas. In other words, the products can compete with Korean and Chinese made goods.

Because of this, the Bank of Japan tends to be very aggressive in its monetary policy. The central bank in Tokyo tends to be one of the easiest central banks as far as monetary policy is concerned in the world. The last 20+ years have been very easy as far as monetary policy is concerned, and as a result interest rates are almost always just a hair above zero. With that, the Japanese yen is not a currency that one wants to hold in aggressive and bullish times as far as risk appetite is concerned.

USD/JPY Live Chart:



 

On the other side of the Pacific, you have the United States. The United States is by far the largest single economy in the world, as far as consumption is concerned. So in a sense, this particular pair is a referendum on global trade. Think of it as a proxy for Asian exports to the United States.

The USD/JPY pair is liquid enough that it can be traded 24 hours a day. While it is true that the Japanese currency itself is at home during the Asian session, the truth of the matter is that this pair is the second most heavily traded Forex pair. With that, it doesn’t take much to imagine how the market can be traded at any time.

There are a lot of different news announcements that can affect this marketplace, with the most obvious one being an interest-rate decision out of the Bank of Japan or the Federal Reserve. Another announcement that you need to pay attention to is the Nonfarm Payroll numbers coming out of the United States. This measures employment in America, which while on the surface doesn’t seem like it would have much to do with the Japanese yen, you have to keep in mind that it represents the ability of American consumers to purchase goods. Other words, the more people that are working in the United States, the more likely they are to buy Japanese exports. Because of that, the more people that are employed in the United States, the more likely this pair is to go higher. Also, you have to keep in mind that the better off the employment situation in America is, the more likely the Federal Reserve is to raise interest rates, which of course would move this pair higher as well.

The spread in this pair tends to be very tight, which is also a byproduct of the liquidity. Because of this, this pair is one of the favorite pairs for traders around the world. However, this pair can move very rapidly, so keep in mind that volatility can make trading the Japanese yen a bit of a wild ride at times. On a day that the EUR/USD moves 70 pips, this pair can move 120. Because of this, a lot of traders like playing this particular pair as a proxy for risk appetite in general. When times are good, this pair can shoot straight up. Of course, it is the exact opposite when times are bad as money floods back to the safer currencies such as the Japanese yen. While the US dollar is considered to be one of the safest currencies in the world, the Japanese yen does have the distinction of considered being even safer.

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