Chart: How JPY has Reacted to Past Quakes

This morning’s earthquake in Japan was the strongest in more than 100 years. The last time Japan experienced a quake even close to the 8.9 magnitude was in 1995 when a 7.3 quake hit the coastal city of Kobe. As we have seen in the price action in the foreign exchange market, risk aversion and repatriation flows has driven the Yen sharply higher against all of the major currencies. Although the clean up and rebuilding efforts will cost a hefty penny and the quake could temporarily paralyze the Japanese economy, the Yen could see further gains just as it did in 1995 when risk aversion and repatriation dominated the flow in the currency.

The following charts courtesy shows how the JPY rose to an all-time high against the dollar 3 months after the quake. Japanese stocks, which had already been in a downtrend continued to fall. If the same type of price action occurs this time around, USD/JPY could fall to a fresh record low.

About Kathy Lien 235 Articles

Kathy Lien is an Internationally Published Author and Chief Strategist of, one of the world’s most popular online websites for currency research. Her trading books include the highly acclaimed, Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2005, Wiley); High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia); and Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley). As Chief Currency Strategist at FXCM, Kathy is responsible for providing research and analysis for DailyFX, the research arm of FXCM. She also co-edits the BK Forex Advisor, an Premium Service with Boris Schlossberg – one of the few investment advisory letters focusing strictly on the 2 Trillion/day FX market.

Kathy is also one of the authors of Investopedia’s Forex Education section and has written for, the Asia Times Online, Stocks & Commodities Magazine, MarketWatch, ActiveTrader Magazine, Currency Trader, Futures Magazine and SFO. She is frequently quoted by Bloomberg, Reuters, the Wall street Journal, and the International Herald Tribune and has appeared on CNN, CNBC, CBS and Bloomberg Radio. She has also hosted trader chats on EliteTrader, eSignal and FXStreet, sharing her expertise in both technical and fundamental analysis.

Visit: Kathy Lien

2 Comments on Chart: How JPY has Reacted to Past Quakes

  1. LOL: I think the operative term in “JPY rose to an all-time high” is “all-time”. True it hit this all time high in 1995. It then SLUMPED for 15 YEARS and has only just reached those highs.

Leave a Reply

Your email address will not be published.