When two of the world’s top 5 economies are trading currencies, it would take a trader with blinders to the financial market not to see the tremendous amount of potential profit that exists in such a currency pairing.
With the exception of the European Union and possibly China (according to estimates for the 2014 financial year which has yet to conclude as of this writing) the US has the largest economy on the globe so it is no surprise to learn that the Dollar is the most popularly traded currency, nearly any currency the Dollar is paired with can be boosted by the relative strength of the Dollar and the US economy it represents, indeed, there are very few currencies that are generally considered on-par with the Dollar in terms of the strength they represent, the yen just happens to be one of those currencies.
There are, as always, various factors one must consider when approaching trades in various currency binary options, and the Dollar-Yen pairing is no different despite the might of the nations involved.
Most traders are well aware of the impact the US has on any global financial market and nearly any currency or currency pairing being traded, however, some traders may not be aware of the role the Yen plays in global trading and the relatively unique way Japan manages its currency.
Shortly following the Second World War, despite suffering an unparalleled level of destruction and loss of life, Japan managed to rebuild itself into a mass producing nation, using its people’s traditional dedication and hard working attitudes to help recover from the brink of economic disaster all the way to a world financial leader, in fact, during the 30-40 years following the war, Japan enjoyed a period of unprecedented growth, bringing it to its current position as a global leader in various economic fields.
That period seems to have eased off for the past 15-20 years, but that is not to say that Japan has forfeited its position, it is nearly impossible to sustain a period of such massive growth for long periods, and the fact that Japan managed to do so for several decades is a testament to just how strong of a nation it is.
Japan’s main division point when it comes to economics is the fact that it relies greatly on exports to sustain its economy, while that may not seem like such a massive obstacle it does tend to have an impact on the Yen.
The central bank of Japan tends to keep the Yen somewhat devalued versus other currencies to encourage purchasing of both goods and the currency itself, this may be sensible most days, but it can have some less than desirable outcomes when the Japanese markets depreciates, the Yen tends to react quite poorly, and due to its intentionally low starting point may cause crashes in the market which may have been avoidable had the currency been kept at a slightly higher level.
Considering the way the Yen fluctuates and the Japanese tendencies regarding it can actually make trading binary options such as the Yen-Dollar (USD/JPY) pairing a somewhat easier endeavor – When you realize that one side of the pairing is more likely to move in a certain direction, you have an easier time predicting the outcome at the end of the contract for the entire pairing.
You know how powerful the Dollar is, you’re now more aware of the Yen and the powers that drive it, trading this pairing will make your investing profile as powerful as these nations…