History of the USD/JPY Pair

The U.S. dollar and Japanese yen pair is nicknamed “trading the gopher” or “trading the ninja.” The U.S. dollar and Japanese yen Forex pair is the second most popular Forex pair, with an average of 17% of daily trading volume. The Japanese economy relies heavily on exports, mostly to the U.S., which means that the USD/JPY pair is an interesting pair to trade.

The Bank of Japan has a lot of influence over the Tokyo market, creating trends and reversals that are good opportunities for traders. To successfully trade this pair, it is important to understand the fundamentals of the Japanese economy.

Trading the USD/JPY: What You Need to Know

Japan’s high investment and savings rate means that there are Japanese investment portfolios spread around the globe, deeply connecting Japan with other world markets. Other factors to consider are:

  • The Bank of Japan will very often intervene directly and indirectly in the foreign exchange market. The bank releases a Monetary Policy Statement every month to announce interest rate and policy changes. This release is usually accompanied by a press conference where the BOJ governor will explain the details of the decision. Tracking these decisions provide insight into the Japanese economy and what effects BOJ interventions will have on the value of the yen.
  • When trading the gopher it is important to follow the major Japanese economic releases. These include the Tokyo Core Consumer Price Index (the price of services and goods in Tokyo), the Japanese GDP, Current Account (a summary of the difference between exports and imports and other factors), and Trade Balance (a monthly accounting of the difference in the value of exported and imported goods). Each one of these releases will affect currency values, so it is important to keep track of when the announcements are made and plan your trades accordingly.
  • On the other side of the pair, traders should keep up with U.S. economic data as well. The most important economic reports to look at are: retail sales, employment data, interest rate releases and Federal Reserve announcements, CPI, and PMI (Purchasing Managers Index) numbers.

You can start trading the gopher right away with UFX’s simple trading platform, extensive trading tools, and excellent support team.