The Japanese yen soared 2% Monday after the Federal Reserve announced that it would cut interest rates and add $700 billion to its balance sheet by buying Treasuries and mortgage-backed securities.
The dollar was down 0.66% Monday against the DXY Spot Index, a basket of major trade currencies. (0.66% is a huge move in the currency markets.)
Swings in the yen moved to an 11-year high this week. That volatility suggests that the Bank of Japan may have intervened in the currency markets to stop the yen’s appreciation. If the Bank of Japan intervened and failed to stop the gains in the yen, it argues that the currency is likely to continue its recent gains. The options market is pricing in a 49% chance the the yen will rally to 100 yen to the dollar within three months.
A strong yen isn’t helpful to the Japanese economy since it makes Japanese exports more expensive in the global economy.
I own the Invesco Currency Shares Japanese Yen ETF (FXY) in my Perfect 5 ETF Portfolio on my subscription JuggingWithKnives.com and JubakAM.com sites. The ETF is up 4.47% since I added it to this portfolio on December 27, 2018. It is up 1.4% in the last month. The position makes up 25% of my ETF portfolio.