JPYUSD, If/When > 1.00, Should Ignite New Upside Phase for Gold

In the chart below I plot JPYUSD over time.

It’s pressing 1.00 as we speak.

Over the past 30 years it’s spent very little time above 1.00 (green), but plenty below (red).  Moreover, 1.00 has acted as a very important pivot point higher/lower over that time.

Thus, a sustained break above 1.00 likely provides plenty of runway for upside expansion, much as it has in the past.

2016-08-18 JPYUSD Parity & Pivot Points - Weekly

What’s the relevancy of JPYUSD to gold?

The correlation!

The top pane below shows how tightly JPYUSD and gold have traveled together since the latter’s 2011 highs.  The bottom pane quantifies it on a trailing 52-week basis via a correlation plot.  It stands at +0.61 over the past year.

2016-08-18 JPYUSD & Gold w Trail 52 Wk Correlation - Weekly

Thus, if JPYUSD >1.00 implies heightened potential for additional, sustained upside in that FX cross, and that FX cross is highly positively correlated with gold, JPYUSD > 1.00 should also be the catalyst for a renewed and vigorous upside move in gold as well.