There is a doomsday scenario going around concerning Japan. Japan resembles a wasteland. Grass grows on bullet train tracks and mega cities decay with society returning to its distant agricultural roots. The USD/JPY currency pair would certainly change its relative values if this scenario were to play itself out.
The United States tends, it would seem, to focus on its own strengths and its own weaknesses. Few in the USA saw the deflation of Japan’s economy coming nearly two decades ago. Few expected to see India challenge China as the most populous nation even though the “one couple one child” policy has been China’s law for more than a generation.
Japanese society is aging and the Japanese national debt is getting dangerously high. Japan may have been the industrial society worst hit by the recession with unused equipment stacked up all over the country. If you are Forex trading the USD/JPY currency pair this is important information. Forex trading the USD/JPY currency pair will be more successful if you have a little advance information about moves the Japanese government might make that will alter the value of the Yen and thus the relative values of the USD/JPY currency pair.
Japanese national debt is not the only issue in Asia. Chinese society is aging and India will outpace China in a few years as the world’s most populous nation. China has a serious problem with water shortage in the Western provinces where there are also problems with disgruntled ethnic groups. The relative value of the Yuan is expected to go up with China’s industrial growth but so was Japan supposed to end up owning the world at the end of the 80’s when their economy collapsed.
Asia will become progressively more important to the world’s economy over the years but not all nations will be winners and not all will be losers. As the Japanese National Debt makes everyone worry whether their technical base is still strong and whether they will be continually able to invent new, attractive products. Forex trading the USD/JPY currency pair does not mean that you should necessarily write off the Yen or the Japanese economy.
The current wild card in Asia is the matter of North Korea. As North Korea shoots missiles over Japanese territory the Japanese are launching satellites and quietly re-arming. Old timers will tell you that one thing that makes other Asian nations loose sleep is the thought of a re-militarized Japan. Image the effect on the USD/JPY currency pair on the announcement of a Japanese nuclear bomb.
That is not to say that Japan would do something so stupid but to remind those in the United States who continually see things through “American eyes” that there are other factors to take into consideration in Forex trading whether it is the USD/JPY currency pair or other major and minor currency pairs. The world has gotten to be a much smaller and more interconnected place, especially with Forex trading. Forex trading brings one into closer contact with the changes throughout the world than other forms of trading. Stay in touch with your Forex trading and stay profitable.