Then yen has been riding the carry trade meltdown for some time now. And for some reason, it's seen as a "safe" currency in times like this. But if you look at the fundamentals, Japan is in big trouble. So this crazy rise in the yen is starting to look like oil did in the first half of 2008: a speculative circle jerk without the fundamentals to back it up. Am I wrong? Is it too early yet to short? What do you think?

Answer
Bad move. Japan has a currency rate of 0.10%. If you short JPY against another currency and that country/region drops their interest rate to stimulate their economy in a recession, JPY will go up. The same will happen if Japan increases its rate.

Regarding the five majors:
USD: 0.25%
JPY: 0.10%
EUR: 2.00%
CHF: 0.50%
GBP: 1.50%

You definitely would be at risk with the cross rates. I wouldn't be surprised if the UK make a rate cut. The swiss franc is no good even with a 0.50% rate because it moves similar to the Euro and the European union has room for rate cuts.

Your only option for shortening the JPY is against the USD. With America wanting to improve employment and the housing market, I think the FOMC will leave the US rate at 0.25 for most of or all of 2009, but even then you've got to hope that Japan doesn't raise their interest rate.

I'm more knowledgeable about the stock market, but I have traded the FX spot market before. If I was trading it now, I would be shorting the Pound against the USD. UK is in a recession and have more room for interest rate cuts. The US and Japan doesn't.

After spending my entire life studying the stock market..do I have it right..?

ok..when I say my "entire life", what I mean is that I watched the 6:00 news tonight, which makes me an expert...in my house.
My expert prediction is that the market will come right back up in the next 2 market sessions, and the networks are trying to scare everyone and create the news.
I know my prediction isnt very complicated, which will make many market watchers be wary of it, but I bet I'm right.
The good news is that we will know by Monday evening.
The bad news is that the networks will start creating other news shortly there after.
re: maximus ....I'm no expert..just an idiot posting messages on yahoo...but when the market rebounds by monday, I will be a GENIUS! ;)
I dont know which market will rebound..I didnt know multiple markets needed rebounding...so I'll let you pick which one..then we'll both be GENIUS ;)

Answer
MSNBC, Bloomburg and the such like just create a load of hype... there is no way that any market professionals base their buy / sell decissions on the waffle on the goggle box.

you say "After spending my entire life studying the stock market..do I have it right..? "

well predicting the right market just once does not make you an expert... you say "the stock market" but what specific market? the dow, the nasdaq?...

"My expert prediction is that the market will come right back up in the next 2 market sessions, "
-- to what level? and for how long? .... eg. its easy to say "buy the market" but what market? and knowing *when* to sell is the other side of a successful trade. what are you basing your trading signal on? a flip of a coin, or genuine market knowledge and insight?

BTW - Each year, some financial magazine or news paper will get a monkey to throw darts at the stocks in the wall street journal... they usually perform quite well beleive it or not !!!

here is a way to prove you are an expert. By filming yourself and posting your (technical or fundimental) analysis on the net (youtube for example) you can allow people to see your prediction BEFORE the event... if you ARE a true market guru, then this will be apparent for all to see, and then, no doubt MSNBC will want you on their show :-)

i sometimes follow people who "predict" the FOREX markets on youtube.

All the best !