Yen...No Safe Haven

As discussed earlier, the yen is no longer acting as a "safe haven" or "risk-off" currency. This is difficult for some in the FX community to accept, but it's the new reality. The recent drop in the US equity market coincided with declines in the yen. In the past the yen would typically move in the opposite direction of the "risk-on" assets such as equities and commodities, but that relationship no longer holds.

S&P500 futures
(the big drop is the Republican rejection of the Boehner proposal)

Yen per one dollar (yen weakening)

Much of this is driven by Japan's fundamentals. The new government will ride the Bank of Japan (BOJ) to make sure it ramps up QE to unprecedented levels. The goal is to "print" so much yen that inflation rises from negative levels (where it is currently - chart to the left) to some fixed positive target such as 2%. Any semblance of independence BOJ had is now gone. . . .

Continue reading:  http://soberlook.com/2012/12/the-yen-lost-its-status-as-safe-haven.html