Currency trading is as old as money itself. Since 2008 binary options have been a new way to trade currencies and make huge profits. Binary options enable traders to profit form direction movements in currency pairings by placing put, call, boundary and touch/no touch trades. One currency pairing that gains a great deal of attention is the USD/JPY pair.
The Japanese economy is the third largest in the world. The United States is the largest economy in the world. One country is American the other Asian. However, there is a lot of interdependence between the countries. Japan’s economy is heavily biased toward the electronics and car manufacturing industries. It is even more dependent on the export of the commodities due to poor internal consumption. The US is one of Japan’s biggest trade partners, which means a drop in demand from America can severely affect profits in Japan. There is a saying in trading that “when America sneezes Japan catches a cold”.
There are two main influencers on price shifts in these currencies. Firstly, economic shifts will be key. Traders in the USD/JPY pairing will look to US Federal Reserve announcements and those from the Central Bank of Japan. Traders also anticipate and study the numerous economic indicator reports from each country and gauge the effect they will have on the currency levels. The second main contributor to price fluctuations in the USD/YEN pairing is trader demand. Technical levels, trader goals and market sentiment will create trader-centered fluctuations.
The Japanese YEN can be complex with extra factors playing their role. It is normally not advisable for beginner traders to jump straight in with this currency pairing. The YEN is best for the economy of Japan when it is weak, promoting more competitive export prices. Low interest rates and high liquidity of the YEN have encouraged the practice of borrowing money in Japan and then investing it elsewhere. This has helped keep the YEN low compared to other currencies.