Financial literacy gained at YEN-kura’s Investment University (Academia) | Episode 5 [YEN-kura]

YENZou's Profile

Enzou. Worked as a foreign exchange dealer for over 20 years at U.S. banks including Citibank, U.K. Standard Chartered Bank, and other foreign banks. Currently, as a top professional trader, he trades in foreign exchange, the Nikkei 225, Nikkei options, and individual stocks. He is the representative director of ADVANCE Co., Ltd., which mainly distributes investment information. He has deep knowledge in dealing not only with major currencies such as the dollar and euro, but also with emerging currencies starting with Asian currencies. He also maintains close friendships with overseas traders and fund personnel.

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*This article is a reprint/edited version of FX攻略.com's June 2020 issue. Please note that the market information described in the text may differ from current market conditions.

Volatility Surged Due to the Corona Shock

The spread of the novel coronavirus infection is accelerating, and the market is fluctuating with unusually high volatility. Looking at the current level of volatility, by the time this magazine reaches you, there may be substantial changes, but for now, let's review the currency movements up to March 19.

◦ USD/JPY on Feb 20: 112.20 → Mar 9: 101.20 → Mar 19: 110.70

◦ EUR/USD on Feb 20: 1.0778 → Mar 9: 1.1495 → Mar 19: 1.0655

◦ GBP/USD on Feb 28: 1.2725 → Mar 9: 1.3200 → Mar 18: 1.1450

◦ AUD/USD on Feb 28: 0.6435 → Mar 9: 0.6685 → Mar 19: 0.5510

From these figures, although dates differ slightly, the dollar stayed strong from Feb 20–28, hit a low on Mar 9, and rose again on Mar 19. Consequently, at the early stage of the European and American outbreak, there was dollar selling, but as the outbreak spread, the dollar appreciated.

Until now, whenever there was a market shock, yen and Swiss francs were bought. This time, in cross yen pairs the yen strengthened, but in USD/JPY the yen weakened. In cross yen pairs, pound/yen and AUD/yen fell sharply, but the dollar was being bought, which is undeniable.