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The Nikkei lost 3.5% overnight while the yen’s strength has garnered much attention recently. This chart shows the Nikkei 225 and the yen futures going back to 1987. The 1989 high in the Nikkei was followed by a low in the yen four months later. Over the past 20+ years, this inverse relationship has often been repeated, but there also have been periods when both have declined (i.e. 1998, 2001-2002). Currently, the gap between the two is quite wide, which increases the probability of a trend change in the next year.
Tom Aspray, professional trader and analyst, serves as video content editor for MoneyShow.com. The views expressed here are his own.
