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SHORT USDJPY - STRAT TRADE: 99.4% PROBABILITY OF REVERSALSHORT USDJPY: 1. Based on the last 16yrs of daily close data (since 01/01/2000 to date) USDJPY has a cumulative probability of a =>7th day lower at 0.6%, hence there is a implied 99.4% chance of reversal on the daily. 2. Technically there is also some nice structure about the 103 level. Trading Strategy: 1. Sell USDJPY at market in 1xlot, and add 2x on each daily close higher from here. Start in VERY small lots to reduce risk and ensure you can add on adverse moves lower (it could be several days). TP is the next/ First daily close higher. Any questions please ask - also see performance attached of recent trades using the same stats
by QuantumLogicTrading
14
SHORT USDJPY - STRAT TRADE: 99.4% PROBABILITY OF REVERSALSHORT USDJPY: 1. Based on the last 16yrs of daily close data (since 01/01/2000 to date) USDJPY has a cumulative probability of a =>7th day lower at 0.6%, hence there is a implied 99.4% chance of reversal on the daily. 2. Technically there is also some nice structure about the 103 level. Trading Strategy: 1. Sell USDJPY at market in 1xlot, and add 2x on each daily close higher from here. Start in VERY small lots to reduce risk and ensure you can add on adverse moves lower (it could be several days). TP is the next/ First daily close higher. Any questions please ask - also see performance attached of recent trades using the same stats
Short
by QuantumLogicTrading
USDJPY - EDGY BOJ TURNS YEN TURBULENT; KURODA SPEECHUSDJPY: 1. Price action immediately following BOJ this september was more than erratic but at the same time showed some consistency for those of you who can remember back to Julys performance - we moved instantly lower on the decision to 101 flat, before ripping 180pips higher to 102.8 to then lose most of the bids and trade back to the 101 base. 2. The BOJ decision itself, imo, was less than clear compared to July though and almost warranted this kind of whipsaw behaviour - especially given the anticipation (or not so much) of the Fed later today which is likely to mingle with risk sentiment and dollar leg of USDJPY the like at some point. - The unclearness regarding whether the policy decision was net hawkish or dovish was given that there was no changes to the main policy tools (Depo, LSP, JGB, ETF), it would leave one thinking neutral-hawkish on expecttions - especially given a 5bps cut was the median BBG forecast. However, on the other hand, you had statements from BOJ including, "BOJ expanding its monetary base until it reaches its 2% inflation target" which is somewhat dovish given it puts never ending monthly JGB 80-100trn yen on the table for the next few years (unless the BOJ is delusional that less time is required). But at the same time this dovish statement was met by a bid from the BOJ to "increase yields for 10y JGB to 0%" and steepen the curve - which in itself is highly contradiction of ANY further expansion to the monetary base (given increases in money supply reduces rates). The BOJ knowing this then went on to cover saying "pace of purchases may fluctuate as to meet 0% target". Thus all in all the above, for me at least, left the overall decision uncertain at best. Given we are only 0.2% down it would be fair to say the outcome was infact neutral. Neutral BOJ and No hike Hawkish Fed was my prediction before (see attached) and i stand behind the 100 level being reached as USD demand is likely to be flushed at some level when the 10-20% priced into USD fed funds is flushed out. BOJ Decision: JAPAN BOJ RATE DECISION STAYS FLAT AT -0.1 % (FCAST -0.1 %) VS PREV -0.1 % BOJ DECIDES TO SET TARGET FOR LONG TERM INTEREST RATES JAPAN BOJ BASE MONEY TARGET STAYS FLAT AT 80 TLN JPY (FCAST 80.00 TLN JPY) VS PREV 80.00 TLN JPY BOJ: ADOPTS QQE WITH YIELD CURVE CONTROL BOJ: TO ABANDON MONETARY BASE TARGET BOJ SAYS NO OFFICIAL BASE MONEY TARGET, BUT MAINTAINS ANNUAL PACE OF JGB BUYING AT 80 TRLN YEN BOJ: TO KEEP BUYING JGBS SO BALANCE OF ITS HOLDINGS INCREASES AT ANNUAL PACE OF 80 TRLN YEN BOJ: INTRODUCES NEW MARKET OPS FOR YIELD CURVE CONTROL BOJ: TO BUY JGBS SO 10 YR YIELD HOVERS AROUND 0 PCT BOJ: PURCHASING YIELDS WILL BE SET PER AUCTION BY INDICATING THE SPREAD FROM THE BENCHMARK YIELD WHICH BOJ DETERMINES SEPARATELY BOJ: DEPENDING ON MARKET CONDITIONS MAY SET JGB PURCHASE SIZE PER AUCTION TO FIXED AMOUNT OR UNLIMITED AMOUNT BOJ: SCRAPS RANGE FOR DURATION OF JGBS THAT BOJ BUYS BOJ: BOJ TO CONTINUE EXPANDING MONETARY BASE UNTIL CPI EXCEEDS 2 PCT AND STAYS ABOVE TARGET IN STABLE MANNER BOJ: ADOPTS COMMITMENT TO LET INFLATION OVERSHOOT ABOVE 2 PCT BOJ: BOJ CAN CUT SHORT TERM POLICY RATE, TARGET LEVEL OF LONG TERM RATES IN FUTURE EASING BOJ: BOJ TO CONTINUE EXPANDING MONETARY BASE UNTIL CPI EXCEEDS 2 PCT AND STAYS ABOVE TARGET IN STABLE MANNER BOJ: BOJ MAY ACCELERATE EXPANSION OF MONETARY BASE AS FUTURE POLICY OPTION BOJ: PACE OF MONETARY BASE INCREASE MAY FLUCTUATE IN SHORT RUN UNDER MARKET OP THAT AIMS TO CONTROL YIELD CURVE BOJ: MAINTAINS COMMITMENT TO ACHIEVE 2 PCT INFLATION AT EARLIEST DATE POSSIBLE BOJ Kuroda:
Short
by QuantumLogicTrading
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: 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
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
USDJPY - BOJ MISS; FISCAL STIM PACKAGE & TRADING YEN FROM HEREBOJ - 3trn increase in annual ETF Purchases + $24bn increase in USD funding for banks 1. The BOJ on Friday delivered a shockingly poor package, imo they changed the snallest part of their current QQE programme. 2. What was interesting though was the markets reaction - immediately after the decision $Yen spiked higher then lower to 103 level but from then and into and through the London Open $Yen was being brought/ held up around the 103 level - it wasnt until NY came in at 1430GMT that $Yen broke lower. - But even then it was surprisingly a laboured move lower, taking almost the full NY session to find its lowes. - Some of the UJ weakness was down to a big GDP miss of 1.2% vs 2.6%exp, which sold the rates market off now implying only a 12% chance of a hike in September vs 18% the previous day and 25% earlier in the week, so i t would have been interesting to see what would of happened with out this dollar downside impetus. USDJPY from here: 1. Personally from 102.00 i see $Yen lower in the near term e.g. we could easily open 50pips lower on sunday into the key level at 101.5 as the asia session adds to shorts that they missed during their own session post-BOJ. - There is the possibility that we see some upside in $Yen as the MOF releases their fiscal package - the more actual govt spending the package includes and the shorter the timeframe, the greater the impact of the fiscal package on giving UJ some relief - but still i advise shorting rallies as i beliveve we move into the 100s from here. - That said in reality the impact of the fiscal package is likely to be limited if not completely muted as 1) the market already knows the extent and some of the details of the package and has done for the past week+ e.g. 28trn of which the market baring piece, the govt spending, is rumoured to be around 13trn - so this information is likely already baked into the price and imo was the driver of the support we saw on friday at the 103 level (asia/ ldn sellers wary of shorting in anticipation of the fiscal package). Thus any topside is only likely to come if MOF changes this dramatically to say 20trn govt spending (anything less is already pre-priced imo) OR even increases the package (but this is also unlikely as Japan has the highest govt debt:gdp ratio as it is) - but imo it is unlikely they would do either anyway. - In-fact, i actually believe the MOF stimulus package has asymmetrical risks to the downside/ disappointing markets - as several MOF officials have commented that the 28trn package is such a large package that it is likely to be over several years - thus the longer the MOF stretch the package over more disappointment the market will price and this could actually end up being a driver for more Yen appreciation given some expected the whole 28trn in one year - which isnt impossible given the size of the Japanese economy (20x bigger than the package + not all of it is in fresh govt spending). UJ View/ Trading strategy - Sell USDJPY asap @mrkt 102 - 100TP1 99TP2 - or wait for the 30/40% chance of a bounce and sell from 103/4 on Tuesday: 1. So I see UJ moving lower from here to the 100's, until Tuesday where i see there being a risk of the market gaining some topside MOF stimulus surprise (which nonetheless is capped at 103.5-104 tops - in which i would sell) but more likely MOF disappointment (e.g. 5y package, less than expected actual spending) which will give UJ seller more ammo and could push us through the 100 level, assuming UJ has traded on the offer since Sunday open (which is likely imo)..
Short
by QuantumLogicTrading
14