- The Swiss franc initially pulled back a bit against the yen during early hours on Monday, but we have turned around the show signs of life again.
- By doing so, it looked like the market is trying to do everything it can to break out and I think eventually hit the 180 yen level.
Funding Currencies Behave Differently
Top Regulated Brokers
Remember, this is a pair of funding currencies, so it does make a certain amount of sense to think that perhaps we are going to continue to see a lot of volatility. But at the end of the day, this is a great pair to at least watch because it tells you what currency you don't want to own. In this case, the Swiss Frank grinding higher against the Japanese yen tells you just how weak that the yen actually is. So, in this environment, I'm much more apt to do something like buy pound yen instead of Pound/Swiss although both could work.
Ultimately this is a market that I think is going to do everything it can to get to the 180 yen level and then break above there. We have several yen denominated pairs right now that all have reached long term highs recently and therefore we have to understand that this is a systematic and structural problem for the Japanese yen as the Bank of Japan can do nothing to tighten interest rates anytime soon. After all, they have too much debt. If they start to tighten interest rates, it could throw the Japanese economy into disarray. So with this, I think you continue to be a buyer of dips on anything that is denominated in yen, including even the lowly Swiss franc. In other words, its not Switzerland that I love, its just that Japan is so toxic it really doesn’t matter what you pair against it.
However, note that this is an indicator kind of pair for me, and I don’t typically put mush into this market. However, I almost always watch it for guidance as to where we are going next in several other markets like the USD/JPY, USD/CHF, GBP/JPY, GBP/CHF, and so on.
Ready to trade our daily Forex analysis? We’ve made this forex brokers list for you to check out.