Thread: FOREX trading

Looks like shorting the Yen may be making a comeback based on some of the comments coming out of Japan. Would be interesting if the USD shorts moved their positions. Then again, it might be scary.

If the BOJ decides to intervene in the currency market, that means they will have to buy dollars or print yen. Print yen is not a smart move when your country is suffering from deflation. On the other hand, where's the yen to buy dollars? Neither sounds like a good idea for Japan to me. Even if they do it, if the reason is to make their products cheaper to increase their exports, with the world economies hardly eager and growing I'm not sure if that helps. I guess it would help against their fellow exporter and rival China, who ties their currency to the dollar, however I think China will ultimately win in a currency poker game with Japan since they hold the cards with the Yuan, and Yen is available on the open market.

I don't think the BOJ is actually doing anything but there are some weird movements in the fx markets today that could suggest some shifting in the currency world. If the yen becomes a better short than the USD... better to limit your equity exposure. (but I've been wrong in the fx world much lately).

I do like the macroeconomic points you made.

BOJ Actions:
"After an emergency meeting, the bank said it would inject 10 trillion yen ($114bn; £70bn) into the economy by offering banks cheap short-term loans...."
http://news.bbc.co.uk/2/hi/business/8387754.stm
[how can the loans be "cheap" when Japan's interest rates already are so low?]

Good catch SB... there's a rumor goin' round that Japan is going to sell US Treasuries... methinks they're a little perturbed. If that happens... and it's a significant amount... yikes!

Selling U.S. treasuries would further inflate the value of the Yen. So its either buy or hold the pair of deuces that they know is a losing hand.

I'd have to respectfully disagree with you there, Silverbird. They already bought those Treasuries... selling them increases the value of the USD... and weakens the yen... which, as an export economy, they would want.

Whether they do it or not is debateable. If they do it, I think they are basically taking a big shot at another sovreign that's a little closer to home... China ... whose currency is pegged to our dollar and an exporter as well.

But, then again, they could sell the treasuries but then buy EUR... weakening both USD and JPY... I wouldn't put it past them. But, it's all just speculation and rumor right now. Nothing substantiated.

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can anyone tell me what is taxed and the rate when currencies are traded???

thanks
john

Originally Posted by GUCHI

can anyone tell me what is taxed and the rate when currencies are traded???

thanks
john

John,

Loaded question, but here goes.

Depends:
Your currency bank will provide you a sheet of paper that describes how you elected to take taxes out of your account based on trades.

There's the long term capital gains tax route, or the 60/40 rule where they tax your income at 60% long term. So, based on how you traded, what tax rate you agreed to and how much you made will determine the taxes applied to that income!

I recommend: http://forexforums.dailyfx.com/forex-tax/ for all types of discussions on the issue.