Foreign Currency Trading, or is it...? [Foreign Currency Trading Diary 10]
Hello! I'm Yuki, and the thing I struggle with most when writing on note is the header image.
It's been 17 days since the Foreign Currency Trading Championship began, and this marks the commemorative 10th entry of my Foreign Currency Trading Diary. ㊗️
I'd like to include a special edition soon, but I have so much material from my daily trading that I have to post every day, so please let me get through that first 🙏 (In fact, this is my 5th consecutive daily post).
Now, today I'd like to talk about my trading situation on Wednesday, July 23rd!
Since this was a day where I learned a lot, I'm hoping to share my knowledge with you all in a two-part format, with today's article as Part 1 and tomorrow's article as Part 2.
So, here is today's starting lineup.
Review of the previous entry
First, let's start with a review of the previous entry as always!
(Click here for the previous article) (I'm waiting for your likes) (This guy is cute)
The last entry was one where I made two big mistakes.
① Buying US dollars and Swiss francs when the yen was weak (foreign currency was expensive)
② Selling US dollars, Swiss francs, and euros when the yen was strong (foreign currency was cheap)
③ I reflected that I should be conscious of buying foreign currency when the yen is strong, which allows me to buy it cheaply, and selling it when the yen is weak, which allows me to sell it at a high price.
That was how it went. It was also an entry where I incurred a small loss.
Now, based on that, let's get straight to the main topic. Here is the trading situation for Wednesday, July 23rd.
The perspective of stock prices
Now, since I've gone to the trouble of reflecting, I want to act with a solid rationale from now on.
As I was scrolling through X in the morning, this tweet popped up.
This is an account I follow that notifies me of sudden fluctuations in exchange rates, starting with the US dollar.
(Please do not follow this account, other participants)
Usually, I only get notifications about exchange rates, but for the first time since I followed them, I received a notification about stock prices.
Could it be that stock prices and exchange rates are related??
If that's the case, shouldn't I act sooner rather than later?
I asked Chappy to verify the truth of this.
Please read this as a warm-up zzz
Q,Is there a relationship between the Nikkei Stock Average and USD/JPY fluctuations?
A, there is a clear relationship between the Nikkei Average and USD/JPY. However, it is more of a "strong tendency" rather than "it will always happen." I will explain the mechanism simply below👇
⸻
💹 Basic relationship between the Nikkei Average and USD/JPY
✅ Generally, "Weak Yen → Nikkei Average rises", "Strong Yen → Nikkei Average falls"
(Continued)
🔁 But are there reverse patterns?
Yes, there are. Especially recently, the following movements have been observed:
✅ When overseas factors (US economy, FOMC, etc.) are strong...
• US interest rate hike → Strong Dollar → Weak Yen → Nikkei Average rises
• US stock price decline → Global risk-off → Strong Yen (safe asset) → Nikkei Average falls
In other words,
• When the Yen is bought as a "safe asset," it becomes stronger, and the Nikkei also tends to fall.
⸻
🧠 Concrete example (recent market)
• From 2022 to 2024:
• US interest rate hike → USD/JPY reaches the 150 yen range → Nikkei Average hits a post-bubble high
• Stock prices of companies with high export ratios, such as Toyota, Sony, and Hitachi, reacted strongly.
⸻
✅ Summary: Relationship between exchange rates and the Nikkei Average
That was the response I received.
At first glance, it's a foreign exchange trading competition, so stocks shouldn't matter... but it seems stocks might actually be a big hint!
In short, according to Chappy, rising stock prices = weak yen, falling stock prices = strong yencan be considered.
(For reference, there was an explanation with similar content on the SMBC Nikko Securities website)
Relationship with elections
I found an article that was very educational, so I'd like to introduce one here.
This article discusses how stock prices move after the House of Councillors election ends.
What I found educational was the following part in the middle of the article.
Changes in diplomatic stance have a major impact on the foreign exchange market and global companies.
・ Tensions in US relations → Yen appreciation (Yen is bought as a risk-aversion move)
・ Self-prioritizing policies (e.g., strengthening tariffs) → Global
corporate profit pressure
Even after this House of Councillors election, the "trade negotiations with the US scheduled for August 1st" are attracting market attention.
Right now, the extent to which Japan will make concessions regarding tariffs with the United States is being closely watched.
It seems necessary to watch this area carefully and trade accordingly.
Also, the relationship between past House of Councillors elections and stock prices/exchange rates is mentioned as follows.
To "truly feel" the impact of an election, past examples are the easiest to understand.
In this chapter, we will look at the movements of typical elections × markets in Japan and overseas.
🇯🇵 Japan Edition: Political stability = Stock price rise, Political turmoil = Yen appreciation/Stock price fall
● 2013 House of Councillors Election (Abe administration, resolution of the twisted Diet)
→ The ruling party won a majority in the House of Councillors, accelerating Abenomics
→ The Nikkei Stock Average rose sharply after the election, and the yen weakened
→ The market welcomed "political stability and monetary easing"
They have even researched past elections in detail for us.
After the 2013 House of Councillors election, stock prices rose sharply, and the yen also weakened.
In this House of Councillors election as well, the Nikkei Stock Average has risen sharply after the election. Also, since there has been no specific statement regarding Prime Minister Ishiba's resignation, the political situation is also being viewed as stable for the time being. (Though I don't know about the future)
Purchased US dollars
So, now that I understand the relationship between stock prices, exchange rates, and elections, let's try it out by taking action.
At 8:04 AM on Wednesday, 7/23, I purchased 30,000 yen worth of US dollars.
The rate at the time of purchase was 146.65 yen.
The reasons for the purchase are as follows.
・Stock price rise = Will it lead to a weaker yen (stronger foreign currency) from now on?
・Stock prices rose and the yen weakened after the 2013 House of Councillors election as well
・Just giving it a try
・I don't have any savings accounts currently in operation
So, based on the examples after past elections, I am going to aim for active profits.
I believe that as stock prices rise, foreign currency will also become more expensive!🙏
Enthusiasm and notice
How was it?
This time, I covered the relationship between stock prices and exchange rates.
I hope to be able to trade while keeping an eye on stock prices from now on.
Also, I would like to be able to trade after carefully comparing the chart wave patterns that I introduced in the 4th article, which I have been neglecting quite a bit lately.
(Click here for the 4th article)
Today's article covered a trade as of 8:04 AM on Wednesday, July 23rd, but a few hours later there was a seemingly significant event involving an announcement from Bank of Japan Deputy Governor Uchida, so I plan to cover that in tomorrow's article.
Once that is finished, I hope to include a special edition article, so I would be happy if you could support me by pressing the Like button on today's article as well!
I have used a lot of difficult terms, but thank you for sticking with me.
See you in tomorrow's article.
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