The foreign exchange market is vast, complicated and ruthlessly competitive. Major banks, 澳洲幸运5开奖号码历史查询:trading houses, and funds dominate 🌞the market and quickly incorporate new inf꧂ormation into the prices.

Therefore, forex trading is not a market for the unprepared. To effectively trade forex on a fundamental basis, traders must be knowledgeable when it comes to the major foreign 澳洲幸运5开奖号码历史查询:currencies. This knowledge should include not only the current economic stats for a country but also t🍃he underpinnings of the respective economies and the special factors that can influence the currencies, such as commodity movement or interest rate changes.

Introduction to the Yen

Just seven currencies account for 83% of the 澳洲幸运5开奖号码历史查询:forex market, and the Japanese yen is one of the largest currencies, in terms of 澳洲幸运5开奖号码历史查询:international trade and forex trading. Japan is one of the largest economies in the world, with one of the highest GDP among nations; it is also one of the largest exporters, in dollar terms.

All of 澳洲幸运5开奖号码历史查询:the major currencies in the forex market have 澳洲幸运5开奖号码历史查询:central banks behind them. In the case of the Japanese yen, it is the 澳洲幸运5开奖号码历史查询:Bank of Japan (BoJ). Like most developed-country central banks, the Bank of Japan has a mandate to act in a fashion that encourages growth and minimizes 澳洲幸运5开奖号码历史查询:inflation.

In the case of Japan, however, 澳洲幸运5开奖号码历史查询:deflation has been a persistent threat for many years, and the BOJ has pursued a policy of very low rates in the hopes of stimulating demand and 澳洲幸运5开奖号码历史查询:economic growth; at various points in the 2010s, 澳洲幸运5开奖号码历史查询:real rates in Japan were actually slightly negative.

The Economy Behind the Yen

The Japanese economy has some particular and peculiar attributes that yen traders need to understand. Firstly, despite its size, Japan has been notably lacking in growth since the collapse of its equity and 澳洲幸运5开奖号码历史查询:real estate bubbles in 1990. Writers often refer to the ensuing years as a "澳洲幸运5开奖号码历史查询:lost decade" in Japan because of this reason. Since then, growth rarely exceeded 2% in 澳洲幸运5开奖号码历史查询:Japan between 2001 and 2011, and went down 29% from 2012 to 2015. Japan is also notable for 澳洲幸运5开奖号码历史查询:inflation, or rather its almost near-absence of it; Japan has actually experienced 澳洲幸运5开奖号码历史查询:deflation for much of the last 20 years.

Second, Japan is also among the oldest major economies in the world and has one of the lowest fertility rates. That suggests an increasingly aging workforce with fewer and fewer younger workers to support the economy through 澳洲幸运5开奖号码历史查询:taxation and consumption. Because of this Japan, once quite closed to immigration, recently began opening its borders to foreign workers to address labor shortages.

Lastly, Japan is also an advanced economy with a well-educated workforce. Although industries like shipbuilding have somewhat migrated to countries like South Korea and China, Japan is still a leading manufacturer of consumer electronics, autos, and technological components. This has left Japan with significant exposure to the global economy.

Drivers of the Yen

There are several theories that attempt to explain foreign exchange rates. 澳洲幸运5开奖号码历史查询:Purchasing power parity, 澳洲幸运5开奖号码历史查询:interest rate parity, the 澳洲幸运5开奖号码历史查询:Fisher effect and 澳洲幸运5开奖号码历史查询:balance of payments models all offer explanations of the "right" exchange rate, based on factors like relative interest rates, price levels and so forth. In practice, these models do not work especially well in the real market—real market exchange rates are determined by supply and demand, which includes a variety of market澳洲幸运5开奖号码历史查询: psychology factors.

Major economic data includes the release of GDP, 澳洲幸运5开奖号码历史查询:retail sales, industrial production, inflation, and 澳洲幸运5开奖号码历史查询:trade balances. Investors should also take note of the information on employment, interest rates (including scheduled meetings of the central bank) and the daily news flow; natural disasters, e📖lections, and new government policies can all have significant impacts on exchange rates.

In the case of Japan and yen traders, the 澳洲幸运5开奖号码历史查询:Tankan survey is particularly noteworthy. Many countries report information on business confidence, and the Tankan is a quarterly report published by the Bank of Japan. The Tankan is seen as a very important report, and often moves trading in Japanese stock and currency.

In many respects, BoJ policy drives 澳洲幸运5开奖号码历史查询:carry trades across the world. Carry trading refers to borrowing money in a low-interest-rate environment and then investing that money in higher-yielding assets from other countries. With a stated policy of near-zero interest rates, Japan has long been a major source of capital for that trade. That also means, though, that talk of higher rates in Japan can send ripples throughout the currency markets.

Unique Factors for the Japanese Yen

While the BoJ has maintained low rates since Japan's property bubble collapsed, the bank has also been involved in 澳洲幸运5开奖号码历史查询:currency intervention—selling the yen to help keep Japanese exports more competitive. This intervention has carried political consequences in the past, however, so the bank is relatively hesitant to intervene in the forex markets.

Japan's trade balance also impacts BoJ policy and forex rates. Japan has historically had large 澳洲幸运5开奖号码历史查询:trade surpluses, but very large public debt and an aging population. A large percentage of that debt is held domestically, though, and Japanese investors seem willing to accept low 澳洲幸运5开奖号码历史查询:rates of returns.

While Japan has very high debt levels, traders tend to be more comfortable with Japan's debt balance. Moreover, traders often balance the high debt level of Japan with its usual high trade surplus, though the 澳洲幸运5开奖号码历史查询:devaluation of the dollar and the "澳洲幸运5开奖号码历史查询:safe haven" status of the yen have led the Japanese coin to become so strong that it threatens the very trade surpluses that makes it attractive. Indeed in the last decade they have uncharacteristically run an increasing amount of deficits.