Jill Malandrino speaks with Jared Dillian to discuss why retail investors should keep tabs on movements in foreign currencies. As a general principle, Dillian suggests that active managers keep an eye on a variety of asset classes, stating that macro factors play a significant role in driving equity movements. Specifically, he mentions that the USD/JPY relationship has a large effect on equity prices. Yen strength tends to correlate to risk-off equity market environments, and vice-versa. Over the last year, the USD/JPY has moved from 76 to 105, and has recently consolidated around the 102 level. Dillian believes that the Yen will continue to weaken due to Japan’s “Abenomics” monetary policy which seeks to reflate the economy via a depreciated currency. Taking a broader look at equity markets, Dillian explains his view that buyers over the last year represent “weak hands” and states that he believes equities are due for a correction.
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