Top 3 Japanese Yen (JPY) ETFs (FXY, YCL)

Top 3 Japanese Yen (JPY) ETFs (FXY, YCL) banknote money currency نقود مال اموال ين يابانى

The currency exchange market is yet another area that has been opened to a wider span of investors through the emergence of exchange-traded funds (ETFs) as an increasingly popular investment instrument. Currency ETFs that trade like regular U.S. stocks have simplified access to investments in foreign exchange.

Currency ETFs reflect the changes in exchange rates between a pair of currencies, or the overall performance of a single currency against a selected basket of other currencies. Currency funds may hold cash in a currency, or use futures, options, forex or swap contracts to track exchange rates and relative values. Investors utilize currency ETFs to add further diversification to an investment portfolio, or just as a simple means of accessing potential profits in the forex market.

The Japanese yen is the fourth most widely traded currency globally, behind the U.S. dollar, the euro, and the British pound, and it is the most widely traded currency in Asia. It is often used as a reserve currency in international transactions. With forex traders, the yen is sometimes used to provide diversification, as it frequently trades inversely to the other major currencies in relation to the U.S. dollar.

CurrencyShares Japanese Yen Trust ETF
The CurrencyShares Japanese Yen Trust ETF (NYSEArca: FXY) was first launched in 2007 by RydexSGI, and it is rated as relatively high-risk. The trust seeks for its shares to mirror the price and performance of the Japanese yen relative to the U.S. dollar. They are intended to provide investment results corresponding to those possible from holding currency in the form of yen.

FXY is the second most widely traded yen ETF. Its with total assets are over $100 million, and its average daily trading volume is over 100,000 shares. The fund's expense ratio is 0.4%. This fund is well-suited to investors who seek exposure to the Japanese yen, specifically in relation to the U.S. dollar.

ProShares Ultra Yen ETF
The ProShares Ultra Yen ETF (NYSEArca: YCL) is the first of two ProShares offerings of leveraged ETFs that track the performance of the Japanese yen. By holding yen/U.S. dollar forward contracts, the fund’s goal is to provide investment results equal to twice the daily performance of the JPY/USD cross rate.

The fund's expense ratio is 0.95%. Its total assets are approximately $5 million, and its average daily trading volume is only about 2,000 shares.

YCL is appropriate for investors who desire leveraged exposure to the performance of the Japanese yen relative to the U.S. dollar, and who anticipate a relative rise in the value of the yen. ProShares offers a similar leveraged ETF that adopts a bearish stance toward the yen.

ProShares UltraShort Yen ETF
The largest yen ETF, as of 2015, with over $400 million in total assets, is the ProShares UltraShort Yen ETF (NYSEArca: YCS). This is another leveraged ETF that ProShares offers to reflect changes in the JPY/USD exchange rate. This fund has a bearish approach to the yen, seeking to provide daily investment results that are 200% of the inverse of the performance of the JPY/USD pair. While YCL shares increase in value when the relative value of the yen rises, YCS shares increase in value when the yen declines relative to the U.S. dollar.

YCS is the only yen-focused ETF that is currently showing a positive five-year return. The fund shares have increased in value 71% between 2010 and 2015, due to a protracted bear market for the yen.

The fund's expense ratio is 0.95%. For investors with a bearish outlook on the JPY/USD pair, and who are seeking leveraged investment results, the ProShares UltraShort Yen ETF is the best option currently available.
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No Solace in Small Caps

In the U.S., second-quarter earnings season has generally been better than expected. However, it has failed to inspire investors. While low rates and sluggish wage growth have allowed profit margins to remain at record levels, large U.S. companies continue to struggle with the competitive headwind caused by a stronger dollar, which has hurt revenues and estimates of third quarter earnings.

In an effort to mitigate the impact of a stronger dollar, many investors have been favoring small-cap stocks, which depend less on international sales than larger companies. But the strategy hasn’t provided much benefit so far this year. The large-cap S&P 500’s modest 1% gain is slightly ahead of the small-cap Russell 2000’s performance year-to-date, according to Bloomberg data.

What exactly is holding back small caps? As I write in my new weekly commentary, “The Curious Case of Dollar Strength,” while small caps do have less exposure to international sales, they have proved more vulnerable to rising real interest rates (the interest rate after inflation) and investor anticipation of monetary tightening.

Recent U.S. economic data—including the ISM non-manufacturing survey and the July non-farm payroll report—have provided more evidence that the economy in the second half of the year should show an improvement over what we saw in the first half. As such, there’s a growing perception that the economy is strong enough for the Federal Reserve (Fed) to begin removing the ultra-accommodating conditions that have defined U.S. monetary policy since 2008, and many market watchers expect the Fed to start raising interest rates this fall.

Those expectations are leading to what’s known as a flattening of the yield curve, whereby shorter-term bond yields rise faster than yields on longer-term bonds, as the former sell off. And this, in turn, helps to explain small cap’s lackluster performance. During earnings season, investors worried about the impact of a flattening yield curve on small cap banks, which make up roughly 25 percent of the Russell 2000, according to Bloomberg data. In addition, consistent with history small cap earnings multiples are proving more vulnerable to a tightening in monetary conditions. According to the Bloomberg data, in July, the trailing price-to-earnings ratio for the Russell 2000 contracted by roughly 2 percent, while S&P 500 gains were supported by multiple expansion of roughly 2 percent.

As for what this means for investors looking forward, I continue to remain neutral in terms of any size bias in U.S. equities. Though small caps have lower exposure to the dollar’s impact on international sales, this benefit is being trumped by small cap’s potential vulnerability to the changing interest rate environment.

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Cuba Tourism: What Will It Cost You? (JBLU)

Cuba Tourism: What Will It Cost You? (JBLU) كوبا

For more than five decades, a U.S. embargo against Cuba has prevented Americans from traveling to the island nation for any reason outside official government business. President John F. Kennedy established the embargo in 1962 as an attempt to choke the Communist-affiliated country's economy, and thus reduce its influence. During the intervening years, the U.S. government has refused to lift the embargo, citing the Castro regime's poor humanitarian rating and brutal treatment of its citizens.

Cuban Travel Restrictions Slowly Being Eased
In late 2014, President Barack Obama began efforts to re-establish a friendly relationship between the United States and Cuba. The president argued amiable relations are the first step toward compelling the country's government to install better economic and living conditions for its people. The first step taken by Obama, in January 2015, was lifting certain travel bans on Americans going to Cuba. While tourism to the country is still prohibited, Americans can apply to visit Cuba for the purpose of education, missionary work or visiting relatives.
Travel enthusiasts, as of summer 2015, are optimistic that a full repeal of Cuban travel restrictions could become a reality in the near future. When this happens, one of the most common questions is sure to involve the cost of visiting Cuba as an American tourist.

Passports and Immunization
The first order of business when planning a Cuban trip, after waiting for travel bans to be lifted, is securing a passport and receiving necessary inoculations. As of 2015, the cost of a new passport is $110 for those over age 16, and it usually takes several weeks to receive it. Expedited service can run an additional $100 to $300 depending on how fast you need it and how close you are to a passport office.
Travel experts also recommend anyone going to Cuba first receive vaccines for typhoid and hepatitis. The estimated out-of-pocket cost for a typhoid vaccine is between $100 and $150; for a hepatitis vaccine, it can range between $100 and $320.

Health Insurance
Cuba requires all visitors to provide proof of health insurance coverage upon arriving at the airport or seaport. Assuming you are covered in the U.S., this poses no additional cost to your Cuba trip.
If you lack health insurance before heading to Cuba, you must purchase it at the airport before being allowed into the country. This runs about $5 per day, but buyer beware: Travelers from other parts of the world comment frequently that this coverage is lackluster.

Airfare
Due to widespread Cuban travel from the U.S. not yet being available, air travel to Cuba is expensive. The cost will likely come down, however, when all bans are lifted and more airlines provide flights to Havana. Flying to Havana frequently requires first reaching a Latin American destination, such as Mexico City, though value airline JetBlue (JBLU) began offering direct charter service from New York to Havana in July 2015. The average ticket cost ranges between $500 and $700 round trip.

Organized Tours
Until the government fully lifts travel bans, the easiest way for the average American to visit Cuba is through a licensed educational tour company. Because education is an approved reason for Cuban travel, these tour companies are able to chauffeur ordinary Americans to the country. The cost is steep, however, at $2,000 or more per person, which usually does not include airfare.

Exchange Rate
Tourists can exchange their money for Cuban convertible pesos, or CUCs, which are pegged to the U.S. dollar at an exchange rate of 1:1. It is advisable, however, to convert American money to Canadian dollars or Euros before going to Cuba. The country imposes an additional charge for converting American money to CUCs.
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Chinese Yuan an Unlikely Reserve Currency

Chinese Yuan an Unlikely Reserve Currency money

As the world's second largest economy, China's challenge to America’s dominance includes a push to set the yuan, officially called the renminbi (RMB), on a similar footing to the U.S. dollar (USD) as the world’s reserve currency. Whether the Chinese currency will ever reach the international prestige that the greenback now holds is a matter of speculation. The dollar has been the world's de facto reserve currency since displacing the British pound sterling around the middle of the last century.

China's yuan is likely to be granted inclusion by the International Monetary Fund (IMF) into its special drawing rights (SDR) basket of reserve currencies that include the U.S. dollar, euro, pound and yen. But even if and when the yuan is included, it will still have a very long way to go to rival the dollar’s preeminence as the international reserve currency of choice.

Recent events, including a sudden 2% devaluation of the yuan and the Chinese government's intervention in its plummeting stock market both signal that the yuan will not be challenging the dollar’s dominance any time soon.

Criteria for SDR Inclusion
The two primary criteria for inclusion in the SDR basket are that issuing countries of basket currencies possess the greatest value of exports over a five-year period and that their currencies are freely usable. The first ensures that only the currencies of countries that play a dominant role in the global economy qualify for inclusion, while the second requirement ensures that only currencies widely traded and used for international payments will be included.


While China’s significant place in international trade meets the first criteria. But whether or not the yuan meets the second criterion is less clear. Some argue that China’s exchange-rate interventions violate this second criteria. But the Deputy of the IMF’s Strategy, Policy, and Review Department has publicly stated that that the IMF's free-usability concept is “distinct from whether a currency is either freely floating or fully convertible.” For this reason, China’s management of the value of the yuan doesn’t exclude it from the IMF’s SDR reserve currency considerations. 

China’s Recent Interventions
Due to weaker-than-expected economic growth, The People's Bank of China recently devalued the yuan by almost 2% relative to the U.S. dollar for two consecutive days. Some argued the move was an act of currency manipulation by the Chinese central bank to boost exports. Regardless, the move may actually help the yuan gain acceptance into the SDR currency basket. The currency has been loosely pegged to the dollar for a number of years, and the latest devaluation is actually more consistent with a market-determined valuation. In fact, the devaluation was welcomed by the IMF, which made it clear that it would have no direct impact on China’s goal of earning reserve currency status.

Nonetheless, other concerns center on the Chinese government's recent intervention to halt a nearly $4 trillion stock market rout. IMF Managing Director Christine Lagarde indicated that the intervention did not disqualify the yuan from inclusion, but she did say that the IMF still needs to do significant amount of work before arriving at a final decision. After the stock-market intervention, that decision may be postponed another nine months, until September 2016. Lagarde has also publicly stated that the real question is when the Chinese currency will be included, rather than whether it will.

SDR Inclusion and International Reserve Status
China’s inclusion into the SDR basket will bring a number of benefits, stabilizing the currency and relieving pressure on policymakers to suppress domestic demand that its banks keep a sufficient level of foreign currency reserves on hand.

For China, the yuan's reserve status holds a high symbolic value, but being included in the SDR basket does not bring it that much closer supplanting the dollar as the the de facto international reserve currency. Non-dollar currencies in the SDR currently comprise only 2% of the total reserves of central banks around the world.

To make the yuan a real competitor with the U.S. dollar, China will need to make a number of significant changes. America has partly gained its dominance through its extensive, open and credible financial markets. China still needs to prove that it is capable of providing a stable and transparent environment for similar financial markets to flourish. And its recent market interventions reveal that the country still has a long way to go to develop the kind of financial markets that will support the yuan as a reserve currency. 

The Bottom Line
China will likely earn the IMF’s official stamp of approval as an international reserve currency in the next year, joining the U.S. dollar, euro, pound and yen. But that will not necessarily give it equivalent status with those other currencies, especially the dollar. International desirability of a fiat currency depends on the perceived strength and credibility of the issuing nation’s government and financial markets. China’s recent stock market intervention hurt that credibility, delaying the ascension of the yuan as a true competitor with the U.S. dollar as the world’s preeminent reserve currency.
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How To Use Fibonacci To Trade Forex

Fibonacci analysis can improve forex performance for both short and long-term positions, identifying key price levels that show hidden support and resistance. Fibonacci used in conjunction with other forms of technical analysis builds a powerful foundation for strategies that perform well through all types of market conditions and volatility levels.
12th-century monk and mathematician, Leonardo de Pisa discovered a numerical sequence that appears throughout nature and in classic works of art. While his studies were theoretical, these Fibonacci numbers show profitable applications in our modern financial markets, describing relationships between price waves within trends, as well as how far waves will carry before reversing and testing prior levels.
The .386, .50 and .618 retracement levels comprise the primary Fibonacci structure found in charting packages, with .214 and .786 levels adding depth to market analysis. These secondary ratios have taken on greater importance since the 1990s, due to the deconstruction of technical analysis formula by funds looking to trap traders using those criteria. As a result, whipsaws through primary Fibonacci levels have increased, but harmonic structures have remained intact.
For example, it was commonly believed the .618 retracement would contain countertrend swings in a strongly trending market. That level is now routinely violated, with the .786 retracement offering strong support or resistance, depending on the direction of the primary trend. Traders and market timers have adapted to this slow evolution, altering strategies to accommodate a higher frequency of whipsaws and violations.

Historical Analysis

Fibonacci grid applications can be roughly divided into two categories, historical analysis and trade preparation. The first category requires an examination of long-term forex trends, identifying harmonic levels that triggered major trend changes. Active market players will spend more time focused on the second category, in which Fibonacci grids are placed over short term price action to build entry and exit strategies.
There’s great synergy between the two applications because price levels uncovered through long-term historical analysis work well with short-term trade preparation, especially at key inflection points. Since currency pairs oscillate between contained boundaries through nearly all economic conditions, these historical levels can impact short-term pricing for decades.
Given the small number of popular crosses compared to the stocks or bonds, it makes sense to perform a historical analysis on each pair, outlining primary trends and levels that might come into play in coming years. Perform this task by zooming out to weekly or monthly charts, and placing grids across secular bull and bear markets. The analysis only needs to be performed once as long as price action doesn’t exceed the highs or lows of the long term grids.
EURUSD Historical Fibonacci Grid
The EURUSD currency pair came to life in the 1980s near .90000 and traded up to 1.42890 in 1995. It fell to an all-time low at .82300 in 2001 and rocketed to an all-time high at 1.60380 in 2008. A grid placed over the massive uptrend has captured all price action in the last eight years. The initial decline off the rally high ended near the .50 retracement a few months later, with that level providing support during tests in 2010 and 2012. Meanwhile, a 2014 breakdown found new support at the .618 retracement, with the forex pair spending 2015 bouncing along that level.

Trade Preparation

Start your trade preparation analysis by placing a single grid across the largest trend on the daily chart, identifying key turning points. Next, add grids at shorter and shorter time intervals, looking for convergence between key harmonic levels. Similar to trendlines and moving averages, the power of these levels tracks relative time frame, with grids on longer term trends setting up stronger support or resistance than grids on shorter term trends.
Many forex traders focus on day trading, and Fibonacci levels work in this venue because daily, and weekly trends tend to subdivide naturally into smaller and smaller proportional waves. Access these hidden numbers by stretching grids across trends on 15-minute and 60-minute charts but add daily levels first because they’ll dictate major turning points during forex’s 24-hour trading day.
Having a hard time figuring out where to place starting and ending points for Fibonacci grids? Stretching the grid across a major high and low works well in most cases but many traders take a different approach, using the first lower high after a major high or first higher low after a major low. This approach tracks the Elliott Wave Theory, focusing attention on the second primary wave of a trend, which is often the longest and most dynamic.

Interaction with Other Indicators

The reliability of retracement levels to stop price swings and start profitable counter swings directly correlates with the number of technical elements converging at or near that level. These elements can include Fibonacci retracements in other time periods, moving averages, trendlines, gaps, prior highs/lows, and relative strength indicators hitting overbought or oversold extremes.
For example, multiple grids on a daily chart that align the.618 retracement of one trend with the .386 retracement of another trend raise odds that forex pair will reverse at or near that level. Add a 50- or 200-bar moving average and odds increase further, encouraging bigger positions and a more aggressive trading strategy. This methodology applies to exits as well, telling forex traders to take profits when price reaches a retracement level that shows multiple alignments.
EURJPY Indicator Alignment
The EURJPY forex pair sells off from 133.75 to 131.05 in just six hours, carving out a vertical trend swing that offers a perfect fit for a Fibonacci retracement entry on the short side. The countertrend wave crawls higher for four days, finally reaching the .618 selloff retracement at the same time the 200-bar EMA descends into the same price level, in a tight alignment. This raises odds the pair will turn lower in a profitable short sale. The subsequent decline gives up nearly 70% of the countertrend wave.

The Bottom Line

Add long-term Fibonacci grids to favorite currency pairs and watch price action near popular retracement levels. Add shorter term grids as part of daily trade preparation, using alignments to find the best prices to enter and exit positions. Add other technical indicators and look for convergence with retracement levels, raising odds that prices will reverse in profitable counter swings.
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