This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Threatening Yen

NEW YORK ( TheStreet) -- The yen fell below the 100 level on Thursday relative to the U.S., dollar. That has been the plan of Abenomics all along, and traders are finally favoring the dollar.

The chart below compares CurrencyShares Japanese Yen Trust (FXY) over DB USD Index Bullish (UUP). That simply puts the movements of the U.S. dollar over those of the yen.

The pair broke out of a multi-month sideways trend, and appear to be headed higher. Japan ran a trade surplus in March higher than at any point over the past year. Japanese Prime Minister Shinzo Abe's plan seems to be working, but at the expense of surrounding economies.

Export heavy countries surrounding Japan, most notably South Korea and Australia, see what Japan is doing as a currency war. Both cut their cash rates this week to make their currencies more competitive. As much as Japan wants to believe it is not engaging in monetary combat, other central banks don't agree.

The next pair is of S&P Equal Weight ETF (RSP) over SPDR S&P 500 (SPY). This pair shows how wide ranging the current rally is.

Short sellers have surrounded weak stocks this earnings season, but betting against equities has been a fruitless endeavor. Short selling hedge funds are down 7.5% year to date, and the truism, "Don't fight the Fed," looks to be in full effect.

Low interest rates have kept equities an attractive investment, and have cast a far reaching net across the asset class. The breadth, or level of participation in the market, has been high during the upswing in equities, and the trend isn't faltering just yet.

The last pair is of DB Precious Metals Fund (DBP) over an equal weight DB Commodity Index Tracking Fund (DBC). This pair measures a basket of precious metals over a basket of equal-weight commodities in order to determine relative strength of the sector.

The chart below shows that precious metals had a steep sell-off a few weeks ago and then a consolidation period. Now precious metals appear to be returning to their downtrend.

Equities are pushing higher, which makes precious metals less attractive, as well as the dollar showing strength with a weak yen. The strength of the dollar pushes commodities priced in dollar terms down, and precious metals are no exception.

At the time of publication the author had no position in any of the funds mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Andrew Sachais' focus is on analyzing markets with global macro-based strategies. Sachais is a chief investment strategist and portfolio manager at the start-up fund, Satch Kapital Investments. The fund uses ETF's traded on the U.S. stock market to gain exposure to both domestic and foreign assets. His strategy takes into consideration global equity, commodity, currency and debt markets. Sachais is a senior at Georgetown University earning a degree in Economics.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FXY $90.68 1.20%
DBP $39.88 2.00%
RSP $79.02 -1.20%
UUP $24.11 -0.66%
SPR $46.42 -5.20%


Chart of I:DJI
DOW 17,695.50 -135.26 -0.76%
S&P 500 2,054.52 -21.29 -1.03%
NASDAQ 4,752.9240 -52.3670 -1.09%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs