But counter to Gartman, ,head of Americas G-10 currency strategy at Bank of America Merrill Lynch Global Research told me:
"I think there is a knee jerk reaction. Investors are looking to sell dollar/yen thinking that repatriation flows and reinsurance inflows could push dollar/yen lower. But I have my doubts on that whether that’s sustainable .If we break 80 on dollar/yen, this thing could run. But I don’t expect the Bank of Japan to take any dramatic measures. And if they do it will be further stimulus for the economy, and that can only be positive for dollar/yen. If anything the interest rate differential works in favor of a weaker yen, not stronger. I have my doubts it can go sustainably lower."
Andrew B. Busch, a contributor to Money In Motionand a global currency and public policy strategist at BMO Capital Markets, told me that investors need to determine their time horizon when considering how to trade the yen today.
“We’re in a little no man’s land right now, trying to figure out what to do,” he told me. “Clearly, Japan is in the middle of a fiscal nightmare, and this is not going to help them. It’s such a mixed reaction. On the one hand, you say you could really be shorting Japan. But on the other hand, the short-term risk-off sentiment will not make it sell off very much.”
Busch said he would still short the yen against the dollar – but he would wait. “You’ll probably get a chance to get into that position below 81.5. I don’t hink the story is over yet.”
Rebecca Patterson, global head of currencies and commodities at JPMorgan’s private bank said:
"The yen impact is not straightforward. However, our sense is that any near-term yen strength that may emerge will be opposed by the Bank of Japan and that our longer-term view for yen weakness remains intact.
Putting it all together, our view is that the yen is a currency we want to sell on rallies. The next key technical support for USD/JPY comes in around 81.42-81.57. Below there, the January low was 80.93-81.10. We would consider looking to buy USD/JPY around that low (81.0), possibly with a stop-loss around 78."
Japanese retail investors are also playing a significant part in propping up the yen, according to Marc Chandler, global head of currency strategy at Brown Brothers Harriman. They are major players in the foreign exchange market – the Bank for International Settlements estimates that they account for about a fourth of the spot trading in FX in Japan – and as Chandler told me, “They have been carrying a very large long dollar position. Supposedly earlier today they were selling the dollars they had previously bought and buying yen. They’re freeing up investments – they don’t know what’s going to happen. They want to keep their money closer to them.”
Other Asian currencieswere also buffeted by the disaster.
Fasten your seatbelts today.
Tune In: Beginning tonight, March 11th, CNBC's "Money in Motion Currency Trading" will air on Fridays at 5:30pm.
"Money in Motion Currency Trading" will repeat on Saturdays at 7pm.