FX Trading with the US Dollar and Japanese Yen

USD and JPY FX Tading

This article looks at the FX trading that you can do with the US dollar and Japanese Yen.

There are many different currency pairs that you can use when you trade on the forex market.  One of the most commonly traded currency pairs is the US dollar and Japanese Yen currency pair.  If you are going to be FX trading with this currency pair then there are a number of points that you have to know about.  You should consider the currencies that make up this pair and the FX trading you will be able to complete with the currency pair.

The US Dollar

The US dollar is the most commonly traded currency on the forex market.  Around 80% of all trades that are completed on the market will have this currency in it.  This is due to the US economy being the largest in the world and the US dollar being the world’s reserve currency.  The easy access to information related to the currency also makes it very easy to trade with.

The Japanese Yen

The Japanese yen is the primary currency from Asia and is the fourth most traded currency on the forex market.   The Japanese yen is characterised by the low interest rate that it offers.  This is due in part to the slow economic growth that this currency faces.  This has made the currency the ideal candidate for carry trading on the forex market.

FX Trading with the US Dollar and Japanese Yen Pair

FX trading with the US dollar and Japanese yen currency pair is something that a lot of people look into.  This currency pair offers a number of benefits that you should know about.  You also need to know how you are going to determine the movements of the market.

This currency pair offers low spreads and high liquidity because it is very popular. This makes it one of the currency pairs that news traders should consider using.  The currency pair is heavily traded during the New York market session and the Tokyo market session.

While the Japanese yen is commonly used in the carry trade this currency pair is not a good candidate.  The reason for this is the volatility that you find with the currency pair.  The Japanese yen is considered to be a more ranging currency, but the US dollar is a trending currency.  This combination forms a number of fluctuations in the trading day and this can upset the carry trade that you are looking to complete.

When you trade this currency pair you will need to take note of the dependence of the Japanese yen on imports and exports.  Japan imports many natural resources and will export a lot of manufactured goods.  This means that any changes on the commodities market can affect the movements of the currency pair.  This is due to the Japanese imports and exports and the fact that most commodities are priced in US dollars.

The central bank of Japan will often intervene when the movements of the currency do not suit the export based economy.  This means that you have to be aware of the possible interventions on the market and not be caught unaware.

 

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