World Too Preoccupied to Save Japan From Stronger Yen

The Japanese yen has been appreciating against the U.S. dollar in recent weeks. Although the yen has not yet reached the levels it hit in March following the tsunami, the yen is far removed from the lows it touched against the dollar after the group of seven decided to intervene in the currency markets. That intervention may have driven the value of the yen down temporarily. Bloomberg reports that the consensus forecast among traders is for the yen to strengthen further against the dollar, despite Japan's economy entering yet another recession. A strong yen may be seen as a detriment to Japanese economic strength. The Japanese economy has traditionally been dependent upon exports. A stronger yen means that Japanese goods may appear more expensive to foreign consumers. If Japan is unable to export, its economy may continue struggle. Recent economic data may demonstrate that Japanese manufacturers are already struggling. According to

, Japan's trade deficit for the month of May was the worst seen in over two years. Of course, a significant portion of the shift in the trade deficit may be due to Japanese manufacturers experiencing supply chain disruptions. Still, the yen's rally may not be the boost Japanese exporters need. Unfortunately for the Japanese, the world seems too preoccupied with Greece and the

to continue to help Japan.

Traders who believe that the yen rallies from here might want to consider the following trades:

Traders who believe that the yen will decline against the U.S. dollar may consider taking positions in the following: