EUR/JPY Shows Bearish Dark Cloud Cover Candlestick
Tuesday, 22. July 2008, 17:04:55
Chart of the day -- chart of the century
The chart of EUR/JPY, FXE:FXY, the barometer of the yen carry trade, shows a bearish dark cover candlestick which is presenting also as a lollipop hanging man candlestick.
It looks like a great unwinding of the yen carry trade is at hand, with disinvestment in stocks and currencies to take place due to risk aversion of
1) the level two and level three assets and debt kept off balance sheets at banks, KBE, and investment bankers, KCE, in qualifying special purpose entities, SPEs, and SIVs.
2) inflation caused by rising price of oil flowing through to consumer prices, CPI, and producer prices, PPI, causing earnings disappointment with corporate profits, and demand destruction.
3) an unfolding systemic risk event of credit gridlock, causing a commercial lending freeze up, resulting in a dramatic rise in corporate bankruptcies; its just one of many deflationary hurricanes that are now making landfall.
4) the bond market place reacting strongly to Bernanke's actions and effectively ending the AAA rating on US Treasury bonds by calling interest rates higher on the 30 Year US Treasuries, $TYX, and by calling credit default swaps higher on Treasuries as well.
The chart of EUR/JPY, FXE:FXY, the barometer of the yen carry trade, shows a bearish dark cover candlestick which is presenting also as a lollipop hanging man candlestick.
It looks like a great unwinding of the yen carry trade is at hand, with disinvestment in stocks and currencies to take place due to risk aversion of
1) the level two and level three assets and debt kept off balance sheets at banks, KBE, and investment bankers, KCE, in qualifying special purpose entities, SPEs, and SIVs.
2) inflation caused by rising price of oil flowing through to consumer prices, CPI, and producer prices, PPI, causing earnings disappointment with corporate profits, and demand destruction.
3) an unfolding systemic risk event of credit gridlock, causing a commercial lending freeze up, resulting in a dramatic rise in corporate bankruptcies; its just one of many deflationary hurricanes that are now making landfall.
4) the bond market place reacting strongly to Bernanke's actions and effectively ending the AAA rating on US Treasury bonds by calling interest rates higher on the 30 Year US Treasuries, $TYX, and by calling credit default swaps higher on Treasuries as well.
WIDGETIZE