How to profit from the decline of the Japanese yen
Back in July I drew reader’s attention to an assortment of factors that are potentially very bearish for the Japanese yen. These factors remain in place and if my assessment of them is correct, then the decline of the Japanese yen could be one of the most profitable trades of the decade.
Background
In June 2007 the Japanese yen began a sustained rise and by October 2011 it had risen by 39% versus the US dollar. It also rose considerably against many other world currencies, notably the New Zealand dollar and Australian dollar.
As the chart below shows the yen rose against the greenback for more than four years, establishing a powerful trend channel. However in February of this year the Japanese currency broke decisively out of this channel, and since then it has been trending sideways.