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USDJPY Final Long Entry Before Invalidation! High R/R!This is a re-evaluation of the final corrective triangle structure. The reason why this is the LAST entry is because our stop can be comfortably placed beyond the invalidation level. A single pip below this level invalidates the count, and we have a huge risk to reward opportunity on which to capitalize. This is a risky position because the BOJ news is pending, so risk your capital intelligently. I will update with more updates as the tide rolls. Happy Trading All
Long
by glennmercer
1
EURUSD/ GBPUSD/ USDJPY - SELL USD ON RALLIES: ECB, FOMC, BOELautenschlaeger remained neutral on the margin, stating raising rates wouldnt help anybody but neither would the change to the APP or further cuts. This comes in line with last weeks ECB's to leave policy unchanged. I think this is more pressure for EUR bids but undoubtedly i think USD will dominate the pair until the fed on the 21st and fed funds pricing will sway EUR$'s price range until then. However, on a no vote, combined with the ECBs hawkish-neutral monpol decision my bets will be with EUR$ heading towards the 1.14 upper percentile of the range. Conversely a surprise hike decision will likely shock EUR$ 200-300pips lower than market on the day, though i wouldnt be surprised to see dips brought as we have consistently seen with EUR$ and monpol changes in the past 12m. On the day fed funds trade flat implying 15% probability for september, hence the shock risk is higher, though i do believe the true probability to lie somewhere near here. US 10yr yields also hit 3m highs today interestingly despite there being a risk-off lingering in the air. For USD now though I prefer to buy yen here on rallies in $Yen, yen broadly cheap given risk-sentiment and BOJ no move (in conjunction with FOMC now move). Also i think sterling is cheap here going into BOE, no action is going to happen imo given the strength of data so i prefer to buy dips into 1.310/5. The inflation "Miss" selling is an over-reaction given we are still at the higher levels recorded in CPI, and clearly there is a new normal lower with inflation which the market is under-pricing in GBP. Unemployment data and retail sales will be watched closely, beats will put GBP back on the bid to 1.34 (assuming BOE are neutral) especially given an FOMC no move puts the fed below their own targets and should cause firm supply. ECB Lautenschlaeger highlights: ECB's Lautenschlaeger: Raising Interest Rates Now Would Benefit Nobody, Not Even Savers or Banks ECB's Lautenschlaeger: I Still Consider Negative Rates to be Justified Despite Risks, Side Effects ECB's Lautenschlaeger: We Shouldn't Feel Obliged to Cut Rates Even More ECB's Lautenschlaeger: We Don't Seem to Have Reached Lower Limit For Rates ECB's Lautenschlaeger: See No Reason Now to Change Design of Bond-Purchase Program ECB's Lautenschlaeger: Must Give Bond Purchases Time To Work ECB's Nowotny Says Monetary Policy Should Stimulate Domestic Demand
Short
by QuantumLogicTrading
1
EurJpy Bullish Continuation for 280 PipsWe have witnessed in the recent week a beautiful and impulsive range/wedge breakout of the EurJpy. It led directly to the first downtrend line on the topside. Market rushed down in recent days back to the breakout point and stalled. I am seeing we are in for a bullish continuation of this multiweek range breakout towards the big downtrend line at around 117.10. I am long @ 114.25 with a tight 50 pip stop and looking for a move to 117.10
Long
by IamJeanPaul
Testing the top of a trading channel towards Kuroda's speechSince its rally from 100, $USDJPY price managed to climb above 2 MA lines and above the 102 structure zone (now all are support). Tomorrow morning (check local time) Kuroda is scheduled to speak. My longer term analysis suggests that the bullish move in USDJPY has just begun but it doesn't mean there can't be a pullback before the next bullish wave. 104 is the key zone to focus on this week. A breakout will lead to extended rally towards 108. A decline can trigger the two reversal patterns (Pinbar and Outside Bar) and lead USDJPY back to 102 and maybe even 100 again. This analysis is part of this week's newsletters - The Weekly Markets Analysis - Check out more trading ideas for stocks and Forex here - goo.gl Tomer J, The Market Zone www.themarketzone.net marketzone.tumblr.com - My blog www.youtube.com - Youtube channel
by themarketzone
EURJPY: Trend following made easyI'd like to share a trade opportunity in this pair. You can see how the moving average on chart shows when it's a good chance to short this pair, looking to rejoin the dominant downtrend in place. We can now enter at market, (if not already in...I'm short from 116.191, and added at 115.164). The price has hit a strong level, which coincides with the mid point of the Brexit induced decline, as well as a recent daily downtrend's resistance, so I expect this pair to roll over, and proceed to accelerate to the downside soon. Good luck if taking this trade, Ivan Labrie.
Short
by IvanLabrie
7
Will Kuroda Sink The Yen in his speech in a few hours?USD/JPY opened higher than the Friday close to a small retracement in it's initial hour and price is now trying to push high (hourly view) with a wick formed above today's open on the next candle. Markets could be primed for the Bank of Japan Chief Kuroda who is due to speak in the early hours of Monday and as per recent speeches he will likely be seeking to manipulate Yen strength to support Japanese exporters. Let's wait and see what happens, the position here is long USD/JPY.
Long
by Elliot_Myers
USDJPY testing bearish trendlineUSDJPY is ending the trading week at a level that leaves us all in suspense for the start of next week. The pair is currently trading at 103.96 with a big resistance level at 104.00-30. There would theoretically be a potential for a double bottom should prices break above this resistance next week, but one would be hard pressed to aggressively short the yen so long as it trades above its support level. Basically, this is a make-or-break moment for USDJPY in which we will either see renewed selling pressures (trend continuation, possibly followed by a break below 100 if the dollar comes under sustained pressure in the weeks ahead) or a bullish breakout (possibly fueled by intensified speculation over an extension of the BoJ's QE program + maintained called for a Fed rate hike).
by ABRAK75
5
DXY/ USD: WEAK ISM PMI FLUSHES USD BIDS - FED MESTER SPEECHUSD disappointingly failed to maintain its heavily demanded week when ISM PMIs not only fell short of expectations but also showed a slight contraction by slipping across the 50 mark to the downside. This data pattern however has been consistent for USD, where it has failed to show any upbeat prints, though in the past months the Job market has been able to stand out from this trend so it is difficult to read too much into what the report tomorrow will show. As discussed in my post last week, i believe the risks are to the downside and even more so that Fed mester has stated that employment has reached capacity and 75k-100k a month will be enough to maintain the rate - a figure like this tomorrow would surely see DXY move back into the 94s, with september expectations likely to drop into the 12-18% range that it had maintained before yellen last week. Fed Mester on the whole was neutral, offering little to support the dovish or hawkish side. USD Positioning: In terms of positioning, given $Yens rapid 6-day appreciation (today would be the 7th on a close above 103.45) I am looking to get short if we can get a close just 15pips higher than market, as a 7th day on the up has only been seen 3 times in the past 16yrs so shorts here are statistically in play - though of course NFP upside bodes a risk, but given my expectations going in (downside) it is a risk I will be willing to take (not to mention i expect market risk to spike increasing yen demand - but i will discuss this in a separate post if we close higher tonight). My long favoured short GBP$ trade is currently hanging in the balance, with little negative data to illustrate brexit impacts coupled with USD data unable to get a footing it is hard to continue with the "short sterling on rallies" approach, given topside is becoming arguably justifiable, if we see Services Monday and construction friday PMIs above the 50 level, short GBPUSD on rallies will no longer be a conviction trade, as there will be no real macro case outside of the broad "brexit uncertainty" which by all accounts is waning as optimism and confidence measures are fading the downside spike. Ask yourself, going forward assuming data holds up which it should, what further reason does the BOE have to ease or GBP have to fall? Brexit negs arent likely to start until Q2 2017 so we have a firm 6m of "stability".. especially when you think of sterling with respect to the massive 1000-4000pips its lost (cross ccy) into brexit, upside from here is certainly possible even if it is just a recovery rally. Trading NFP on a 220k print is also possible as a tactical trade e.g. long DXY, as DXY is likely to offer lower some more going into the event as the market derisks. Fed Mester Speech Highlights:
TVC:DXY
by QuantumLogicTrading
8
SELL GBPJPY: RISK-OFF SHIFT COMING? LOWER BOE MONPOL EQUILIBRIUMGBPJPY: 1. Given Fed Yellen's "hawkish" market response and GBPUSD, GBPNZD and GBPAUD shorts TPd on the rally lower today cleared (FX risk book clear too), im looking to add some safe haven assets to my portfolio. 2. Looking at GBPJPY and GBP structures on the whole, there has been alot of sterling longs in the past 2wks accumulating in spot as economic confidence falsely increases (imo, given intelligent money understands near-term UK risks are to the upside). - GJ rising some 7 of the last 9 days, and now 400pips above the aug 16th lows of 129 at 133.3 I think there is at least that 400pips in downside available from here as the new equilibrium for several reasons: 1) Fed Yellen being hawkish looks like it may be the catalyst for the september US Equity sell-off, in which case, highly negatively correlated assets (e.g. safe havens yen, gold UST) are likely to pick the bids up, thus driving GBPJPY lower i.e. A tightening of financial conditions in the US will put pressure on US equities and also US election risk will transfer into Yen demand - also Brexit/ A50 risk is a medium term yen topside catalyst which makes sense owning through GBPJPY downside. 2) GBP shorts at these levels, given the monpol introduced by BOE, look like the smart move as the market is significantly higher than the monpol lows (which should be the new equilibrium). 3) Further BOJ action is made more unlikely by a hawkish Fed - hawkish fed looks to have provided $yen some topside support in the immediate term if nothing else, this eases pressure on the BOJ to ease - though a counter to this is the recent BOJ Inflation CPI traded some 30bps lower at 0.5% - the biggest drop since its inception (and the lowest level ever) this could be a push to more easing. However, the July Meeting misfire when expectations were perhaps at their highest and the current JGB drying liquidity situation somewhat capping the extent of further easing, I cant see the BOJ doing anything more than jawboning, as they have consistently continued to do (and about the only thing they have). Also for extra confidence, even if the BOJ was to ease - look at the past 2 times (Jan April), both policy measures provided 0 equilibrium relief to yen downside and infact fueled some 500pip+ topside to yen, so yen bulls imo can feel conforted that further easing is likely to have little impact, even more so as their ability to do more is ever reduced. 4) Technically, as mentioned weve been on a 2wk bull run so i feel GBP topside is due a rebalancing lower, and also the downside targets are not uncharted territory having traded at the 129 level on 2 previous occasions so the profit target isnt unreasonable. 5) I hear RM long-term short positioning, is picking up at these levels where sterling looks arguably overbrought. Trading Strategy - SHORT GBPJPY @133.3, add at 134 135 and 136 - TP 130.5 and 129 1. Short GBPJPY - Small at market price 133, and add ever 100pips higher if bulls continue up to 136 - the macro resistance levels on the daily are the 134 and 136 level. - Short small here at 133.3 and ADD as we move higher as short sterling given brexit/ monpol future and long yen given the risk-on bull run which is bound to run out given hiking and election risk intensifying imo is an all but guaranteed trade. Any questions on the trading strategy PLEASE ask!!
Short
by QuantumLogicTrading
4
Long-term view - will be updated regularly Watch for small correction within the major downtrend which started late 2014. Very strong moves will be necessary to break out of this bearish trend. I believe we are in the middle of a impulse pattern downwards, working on a wave 3 atm. Watch for correction within the waves, and short on jumps upwards. it will be interesting to see what BOJ will do to keep trying to turn the deflation around..so far no good. Will pay attention around 111.5 which is fib 1.618 of purposed wave 1 on the chart.
Short
by Chartist4312
USDJPY: FADE SHORT ON RALLIES; BUY 104.1 BREAKOUT$Yen - There is little impetus for this pair this week, with this recent rally likely part of the NFP report flushing out. - Nonetheless from here I maintain my bearish bias given the BOJ and JPN govts massive let downs I think USDJPY topside will struggle and we will move through 100 once the risk-off tone returns (which is likely once the equities rally/ excitement fades... and still waiting); thus, short on rallies into key resistance levels e.g. 102.5, 103.3 is advised. - However, between the 103.3 and 104.1 level there seems to be an area of "No mans land" which is filled with contradictory bullish/ bearish signals thus i advise not trading the pair between this range. - Furthermore a break above 104 and close on the daily and my view turns to bullish - citing the relative lows e.g. $yen already 20% down so struggling to fall more or a medium term risk-on shift maintaining thus driving the pair higher through weaker yen demand. Trading strategy: 1. Sell $yen at 102.5 resistance, 101.6tp1 101tp2. 2. PotentiallY buy $yen on a 104.1 break-out but I will advise on this if it becomes the case.
Short
by QuantumLogicTrading
15
GBPUSD/ GBPJPY: BOE POLICY DECISION & CARNEY SPEECH HIGHLIGHTSBOE's policy decision and QIR was largely inline with expectations, perhaps even 10bn better than expected on the QE side - and was very forgiving with hints towards further interest easing, though the stubborn unwillingness to realise negative rates undermined this to some extent. GBPJPY and GBPUSD shorts traded into intermediate TP levels - with GBPJPY unsurprisingly outperforming (implied vol adjusted) given USD weakness, and trading through the 133 handle (132.3 now targeted) whilst cable traded abit more firmly bid struggling to even test the 1.308 pivot, let alone break it - i think we will see a 1.308 key support break tomorrow if NFP comes in hit or beat and I am now waiting for this (gbpjpy shorts closed). BOE Monetary Policy Decision Highlights: BOE Aug Minutes: 0 Members Voted to Increase Rate DJ News BOE: Six Members Voted To Expand QE Program, Three Against BOE: Forbes, Weale And McCafferty Voted Against Expansion Of QE BOE: QE Dissenters Saw Risk That Recent Surveys Overstate Economic Weakness DJ News BOE: Eight Members Voted To Launch Corporate Bond Buys, Forbes Dissented DJ News BOE: Forbes Concerned By Excessive Stimulus, Risks Of Corporate Debt BOE: All Members Voted In Favor Of Term Funding Program BOE: Majority Of MPC Members Expect To Vote For Further Rate Cut 0 BOE: MPC Members See Lower Bound For Bank Rate "Close To, A Little Above" Zero BOE Aug Minutes: MPC Voted 9-0 To Lower Bank Rate To 0.25% BOE Aug Minutes: 0 Voted to Keep Rate Unchanged BOE Aug Minutes: 9 Members Voted to Lower Rate BOE Signals MPC Not Contemplating A Move To Negative Interest Rate BOE: Economic Outlook "Has Weakened Markedly" Following Brexit Vote BOE Makes Largest Cut In Economic Growth Forecast Since 1993 BOE Cuts 2017 Economic Growth Forecast To 0.8% From 2.3% In May BOE Cuts 2018 Economic Growth Forecast To 1.8% From 2.3% In May BOE Sees Declines In Business Investment During 2017 And 2018 BOE Sees Business Investment Down 3.75% In 2016 Versus 2.5% Growth In May BOE Sees Business Investment Down 2% In 2017 Versus 7.25% Growth In May BOE Sees Housing Investment Up 1.25% In 2016 Versus 4% In May BOE Sees Housing Investment Down 4.75% In 2017 Versus 5.25% Growth In May BOE Sees Pickup In Inflation On Weaker Pound BOE Sees Inflation At 2.1% In 2017, 2.4% In 2018 BOE: Measures Ensure Inflation Won't Fall Below Target In Medium Term UK Hammond: Prepared To Take Needed Steps To Support Economy BOE Expands Program Of Government Bond Purchases By GBP60 Bln BOE Purchases Of Government Bonds Will Take Six Months To Complete BOE Government Bond Buys Will Take Total To GBP435 Bln From BGP375 Billion BOE Last Expanded Stock Of Government Bond Buys In November 2012 BOE Launches New Program of GBP10 Billion In Corporate Bond Buys BOE Purchases Of Corporate Bonds Will Take 18 Months to Complete BOE Will Buy Non-Financial, Investment Grade Bonds BOE: Issuers Of Corporate Bonds Must Make "Material Contribution" To UK Economy BOE Approves Term Funding Scheme To Provide Loans To Lenders BOE Loans To Banks, Building Societies At "Close To" Bank Rate BOE TFS Intended To Ensure Cut In key Rate Passed On To Businesses, Households BOE MPC Sees Room To Expand all Four Stimulus Measures BOE Govenor Mark Carney et al. Speech Highlights: BOE Carney: UK Has One Of Most Flexible Economies BOE Carney: Can't Fully Offset Economic Impact Of Brexit BOE Carney: Package Of Stimulus Measures Is "Exceptional" BOE Carney: By Acting Early Can Reduce Uncertainty, Bolster Confidence BOE Carney: GBP Fall Will Boost Exports, Reduce Imports BOE Carney: MPC Has Been "Conservative" In New Growth Forecasts BOE Carney: Package Ensures Stimulus Will Have Maxium Impact
Short
by QuantumLogicTrading
4
USDJPY: BOJ DEPT GOV IWATA - MORE WORDS, NO ACTION; SELL 101/2.5BOJ dept Gov Iwata was the most recent in what seems to be a slew of attempts by JPY officials, whether it be Govt or BOJ to try and weaken the Yen with yet again more dovish/ promising rhetoric. Statements such as "prepared to loosen policy further without hesitation" where in my mind no doubt undermined by the BOJ's seemingly blind assesment of future expectations - with Iwata claiming inflation should hit 2% by the end of 2017, even though policy is relatively unchanged since January where inflation has gotten worse so i dont know how JPN is going to pull off what would be the fastest increase in inflation in history. Further, comments such as "BOJ increased ETF purchases to prevent worsening of corporate and public sentiment" were naive at best.. 30bn of etf purchases in a year amounts to that of an average sized hedgefund OR a very small asset manager, so how he thinks such action will uplift the worlds largest economy with increased measures of less than 1% of its GDP more than baffles me. BOJ/ Govt seem deluded to the greatest extent, or more realistically - holding $yen shorts from the start of the year, no poilcy but strong rhetoric certainly supports this view (humorous). More seriously though, BOJ et als inability to take real responsibility for printed targets, and make policy = words to me makes the future clear for $yen trading. Lower is the only direction that is clear from here - in what was the most pressured BOJ meeting, from both markets and govt perspective, the BOJ performance was dismal so it leads the question, if not now why would it ever change? And Iwatas comments back this up, from the dept govs view, JPN is on firm track to hit its targets in amazing fashion.. so with such strong/ positive views (even if no data supporting), why will BOJ ease drastically more? they wont, as if most share his sentiment (which they do with most not voting to change the rate or JGB purchases which make up the bulk of the easing programme). So all in all, Iwata's and previous speakers comments firmly in mind short $yen is now my view - after being a strong $yen bull on the basis of big easing with risk-on spill overs. Fading rallies seems appropriate and the 101.5 level today held unfazed which looks like a good level to add shorts for the imminent 100 level break. On the way down 101.5 was an intermediate level, 102 was the key so I am surprised it held and would prefer to short from the 102 nonetheless (much more likely to hold and 50 more easy pips of downside). BOJ IWATA SPEECH HIGHLIGHTS
Short
by QuantumLogicTrading
SHORT GBPUSD/ GBPJPY: BOE EXPECTATIONS & FORECAST - FADE RALLIESimo sterling strength/ USD weakness has opened up a great opp to get short vs the USD. Also, technically £YEN looks like it has some 400pips of downside in it available if the BOE do ease and weaken the currency (130.5). Shorting GBP$ at 1.33 opens up 250pips of easy downside profit assume the BOE deliver 25bps and 50bn of QE (the consensus) - £Yen at 1.35 opens up 400pips+ to 130.5 if there is a cut - I like selling gbpyen as it also gives exposure to long yen which post BOJ/ MOF failing to deliver is a given (nothing to stop safe haven demand dominating). In terms of sterling forecast I think a 25bps cut and 50bn QE should spike us to lows at 1.28, with the tail-end likelihood stretched to 1.25xx if they were to cut 50bps and more QE. Personally I am owning alot of GBP downside but will TP at an earlier level e.g 1.305 and 130.5 as central bank action has had a limited impact recently/ the propensity to fade action has been high (think of RBA Yesterday). Nonetheless, I may leave some 25% on the table in order to own more of the downside possibility. BOE Positioning I hear is building up nicely at the 1.33/4 level (though we are yet to see this transfer into realised downside for cable), and the rates markets are now full pricing well over the 25bps of cuts expected - Nominal OIS spot and forward rates are pricing - 27bps and 29bps respectively as of 12noon 2nd Aug (Spot same as 1st Aug, Fwd pricing 1bps less - 30bps on the 1st) vs the July meeting on the 12th of July there was only 25bps priced into the spot OIS curve BUT there was 31bps into the forward curve - thus we are seeing a lack of consensus e.g. whilst the spot is pricing 2bps more aggressively for the Aug meeting the Forward curve is pricing 2bps less - the spot curve is usually more conservative though so this implies that the rates market IS positioning more aggressively for the BOE this time round (since the spot is 2bps more aggressive now vs july meeting and the too rates are converging signalling the market expects a lower longer term equilibrium that a rate cut would bring). Also the 1wk and 1m GBP Libor is pricing cuts much more aggressively than for the July meeting - where July 12th had 25bps priced at 22% for 1wk and 18% for 1m, and now the 2nd of Aug has 25bps priced at 36.67% 1wk and 36.8 1m, which is the best part of 2x more aggressive. Further the options market looks to have a mildly short bias for 4th Aug expiries - with 25delta risk reversals skewed 1vol to the downside for gbpusd and 1.5vols to the downside for gbpjpy as investors look to own BOE delivery through lower risk option markets. USD should also firm up in the next few days as fed funds implied hike probabilities have stabilised and steepened up again, with a 18% probability of a hike in sept now priced vs 12% yesterday - this should help GBPUSD trade well offered tomorrow on a BOE delivery as gives USD a stronger base. REUTERS POLL- -STERLING SEEN AT $1.30 IN ONE MONTH, $1.26 IN THREE MONTHS AND $1.27 IN 12 ($1.31, $1.28 AND $1.29 IN JULY POLL) GS GBP forecast: - In its latest forecast on the GBP, analysts at Goldman Sachs see sterling at $1.20 and 90 pence per euro in 3 months, $1.25 and 80 pence per euro in 12 months. RBC on BOE: -Research Team at RBC, expects that the UK MPC will vote to cut Bank Rate by 25bps to 0.25% and increase the QE target by £50bn by renewing its programme of Gilt purchases over a four-month period. Danske Bank on BOE: -Research Team at Danske Bank, estimates that just over 25bp worth of rate cuts at this week’s Monetary Policy Committee meeting has already been priced in by the UK money market, while the overnight interest rate is priced to fall to 0.15% by the end of 2016 RBS on BOE: -Ross Walker, Research Analyst at RBS, suggests that the UK monetary policy easing is coming in August in the form of a rate cut – probably 25bp, possibly 50bp – is the most likely part of the package.
Short
by QuantumLogicTrading
3
USDJPY RTRS FORECAST: BOJ/ MOF - COMMENTS ABE, KURODA, ASAKAWAInterestingly the RTRS poll for Aug has a bullish near-term bias for $yen vs in July - my opinion is contrary to their poll as the BOJ and JPY MOF failed to deliver the hype expected/ promised this past week - i think 101/2 is much more likely for the next 3 months vs their 103.8. Comments from PM Abe, MOF and BOJ minutes that we observed in the Asia session were much of the same but once again markets digest the information as "actionless" as we have heard one too many times about the JPY govt/ BOJ's willingness to intervene in FX markets "if need be" yet their policy fails to back up such claims. Further in all honesty the BOJ has only ever intervened in the $yen price in recent times (post 2008) when it has been less than 90, and closer to 80 - so in reality imo we have until atleast 94 before we have to worry about any potential intervention spikes. My view on $Yen remains bearish, with broad USD strength today helping $yen rise into the 101.5 pivot level which it has failed to break so far - i expect $yen to test this level several more times today - failure to break and i will short OR i am happy to short at the 102 level which is likely to be very restrictive anyway. Targets to the downside are 100.5 and 100, then 99. Through 99 we look towards the 94 level. a Push here will require the risk-off tone of 2016 to continue to dominate this half of the year too, whihc seems somewhat likely as gold continues to rally close to yearly highs yesterday and US presidential elections, FOMC hike projections and brexit uncertainty still linger. A close below 98.5 and the clear selling target is 94 - this is my terminal forecast for $yne before any bull trend can emerge - with failiure from BOJ to diverge their policy more in the highly pressured july meeting, im struggling to see what drivers there are to move $yen higher and through the 104 key level going forward - imo a 20-30bps depo rate and LSP cut, combined with a 10-20trn JGB extension is what is require to see $Yen maintain the 110 level and be able to fight the risk-off pressures. Until BOJ policy is adapted in such a way, selling remains the bias. REUTERS POLL - 1. YEN TO WEAKEN TO 103.8 TO THE DOLLAR IN THREE MONTHS, 105.0 IN SIX MONTHS, AND 107.7 IN A YEAR (VS 103.0, 105.0, 108.0 IN JULY) JPY PM Abe highlights: -JAPAN PM ABE: EXTRA BUDGET TO BE SUBMITTED TO DIET IN AUTUMN -JAPAN PM ABE: ECONOMY IS TOP POLICY PRIORITY FOR NEW CABINET -ABE: TO STRENGTHEN TIES WITH NEIGHBOURS LIKE CHINA, S KOREA -ABE: NOT THINKING ABOUT SEEKING TO EXTEND TERM AS LDP PRESIDENT Economy -ABE: I TRUST KURODA'S ABILITY AS BOJ GOVERNOR -ABE: SPECIFIC MONETARY POLICY STEPS UP TO BOJ TO DECIDE -ABE: KURODA HAS SAID THERE'S NO LIMIT TO BOJ'S MONETARY POLICY JPY MOF's Asakawa Highlights -JAPAN MOF'S ASAKAWA: IF NEEDED, READY TO ACT ON JPY IN LINE WITH G-7 AGREEMENT -JAPAN MOF ASAKAWA: INTEREST RATES, CURRENCY MARKET ARE VOLATILE -JAPAN MOF ASAKAWA: CLOSELY WATCHING FOREX MARKET MOVES -JAPAN MOF ASAKAWA: CLOSELY WATCHING FX MARKET TO PREVENT SPECULATIVE MOVES FROM BECOMING ACTIVE -JAPAN MOF ASAKAWA: FOREX MARKET SHOWING ONE-SIDED AND SPECULATIVE MOVES -JAPAN MOF ASAKAWA: WILL RESPOND TO CURRENCY MOVES IF NEEDED IN LINE WITH G7, G20 AGREEMENT -JAPAN MOF ASAKAWA: Recent Rise In JPY Is 'Quite Biased, One-Sided, Speculator-Driven' -JAPAN MOF ASAKAWA: JGB Yield Volatility, JPY FX Rate Is 'Very High'
Short
by QuantumLogicTrading
GJ Short awaiting reversal to the upsideI've set various s/r at daily/weekly levels which also respects .00 and 0.5 levels coincidentally maybe. I still see this pair go down a bit more before retracing to the upside heading for the upper trend line of the channel. Why? Well we are about to hit the 0.618 at 134.229 (I would say we could reach the 134 before an actual bounce to the upside) which is a strong psychological level based on a huge number of traders who use that level as a reversal level and also because we are expecting data this week. It is said that there are high probabilities of the Bank of England (BoE) to cut rates by 25 basis points however, the effect of Brexit was not as tremendous as expected and it seems like they've been doing pretty well even after this whole situation so it could be highly expected that they simply hold rates for the time being. If that were to be the case, we would be seeing a major bounce back in the GBP. Also, after BoJ's decision on Friday which was a total disappointment, we could be expecting Japan to devalue their currency by most probably adding more money to their stimulus (as reported by JPMorgan Stanley that they could cut rates to -0.3% raise Japanese Government Bonds (JGB) purchases to YEN 100 Tln instead of the previous YEN 27 Tln. This would also fuel the bounce back on that lower TL.
Short
by howlongyouball
SPX: BOJ MISS = BULL RUN END +2% + 2016 SAFE HAVEN TREND RESUMESEnd of the bull run Global Equity Indexes: 1. SPX/ Global Equity indexes in the past 2/3wks saw a post-brexit central bank easing induced rally, as many CB released dovish statements following the vote which spurred investor confidence in fresh easing. - IMO much of the bull run was based on BOJ easing hopes, given the size of the economy (4th largest) stimulus from the BOJ had risk sentiment increasing affects - though now in light of no new easing from the BOJ and many CBs shrugging off/ UK internalising the brexit impacts I believe this bull run is over. 2. Technically speaking we may see another week or two of sideways or +1% as the market awaits easing policy information from the BOE (6th largest economy), but past this and regardless of what the BOE does i think the upside bias will cease. BOE is only likely to inject 50bn over probably 6m+ which is a drop in the ocean relatively as the BOJ does 100bn+ in one month, so by mid august latest I expect risk-markets to turn sour and a 10% correction is likely. Confirmation the risk-rally is over: - During this bull run we have seen risk markets/ SPX make gains rather frigidly, one day up one day down has been the trend - rather than the usual breakout green green green rallies of the past - this to me indicated that the topside was cautious and reinforced my view that it was central bank driven (not equity market performance driven). Thus, Confirmation of the trend turning to risk-off will be consecutive days of risk markets falling (SPX/ global indexes) OR consecutive safe haven markets rising (Gold, UST, Yen) and the emergence of a strong negative correlation between the two assets will be a solid second indicator that the 2016 risk-off trend is back. Trading Strategy - a number of ways to play this one: 1. Short FTSE100 @6700 or 7000 (wait for BOE) - this is my favourite trade but has a few conditions. We have built some resistance at the 6700-800 level so here isn't a bad place to sell however i think we will get a better selling vantage point next week, assuming the BOE cut the bank rate 25bps. - The BOE easing should move FTSE100 up 3-4% in a few days into the 7000 ATH key level as easing boosts business conditions and a lower GBP increases FTSE company international competitiveness. The 7000 level is where I am aiming for FTSE shorts with sell-limit orders as 1) its all time high levels; 2) I like to fade central bank action since it is artifical; 3) the broader risk-run is over so FTSE will suffer with the rest of the market 2. Short US Indexes @Market - SPX is perhaps the best short ATM given it trades right at its newly set all time high levels and on the backdrop of the BOJ miss we should see some downside soon. 3. Long Yen @mrkt - in the immediate term my favourite trade I like long Yen (for 200-400pips) against USD and GBP, given the BOJ backdrop is most related to JPY markets. We have already we seen the risk-off transmission taking place in here as Nikkei sold off 2% after the result and JPY grew 3% but i still think in the immediate term e.g. 1wk we can see more JPY topside and Nikkei weakness - me prefering to trade the FX strength over the equity as the equity often follows as a function of FX strength. 4. Long Bonds or Gold @mrkt - for the medium/ longer term I like buying govt debt, particularly UK gilts (BOE QE increases demand) or Gold - Gold we saw move higher on Friday in reaction to the BOJ so it will be interesting to see if we can get risk-off confirmation run from this next week (look for 3/4 green days). Risks to the view: 1. US Earnings have outperformed imo on average this Q, so the risk-run may be sustained for longer than the 2wk window that I expect. Nonetheless, i think even this is capped at 4wks e.g. we should be in full bear mode by the start of September - look out for the confirmation, a run of 3/4+ days of consecutive safe haven gains is often all the markets have to signal to show
TVC:SPXShort
by QuantumLogicTrading
6