JPY

it is an old story yes but this doesn't rule downgrade out...BUT what effect could it have?
JPY is relatively strong because Japan is in deflation thus there is no reason to assume the value of JPY assets could be eroded by inflation ... a downgrade doesn't turn deflation into inflation

a downgrade of Jap sov would yield JPY strengthen I think...

USDJPY just brokered below 88 level, which till earlier I was thinking could have been a nice triple bottom. Then this level if had held, the next topside target would have been the 38.2% fibonacci retracement line at 88.33 on the move from the low on July 7th to the high on the 12th; further is the 100 hour moving average coming in at 88.57. Below 86.90

"An upcoming change to Japan's margin trading regulations will likely support the yen in the coming weeks. Some analysts estimate margin trading comprises as much as 20% to 30% of yen trading liquidity here on any given day.

Last year, the Financial Services Agency announced it would set limits on how much foreign-exchange investors can buy on margin, in order to protect "Mrs. Watanabe" - no relation to the Your Party leader. The common surname has become the collective moniker for Japan's retail investors, in a country where housewives are often in charge of family budget and investment decisions.

The plan calls for the leverage cap to be set at 50 times the amount of principle cash committed starting in August, and then further cut to 25 times next year.

The rule change came after a spate of local media reports about some of these housewives losing huge sums, trading on margin hundreds of times the minimum amount they were required to invest up front to open their accounts.

Tohru Sasaki, chief foreign-exchange strategist for Japan at J.P. Morgan Securities in Tokyo, estimated in a report this week that "Mr. and Mrs.Watanabe" hold about 6 trillion yen ($67 billion) of short-yen positions, which he said is "almost the same level as the peak in 2007."

While Sasaki doesn't expect a flood of unwinding, he does expect some yen-buying stemming from the new regulations, as the Watanabes unwind their positions to comply with the new rules."
http://www.marketwatch.com/story/short-term-yen-support-is-real-2010-07-14?link=kiosk

Hello Ashraf,

I just wanted to know your outlook for USD/YEN pair since Standard and Poor is considering cut Japan's credit rating and also of the political issues there right now. I am long at 88.30 and my target is 90.30

thanks,

Farzan