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USD/JPY short adjustments

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  1. USD/JPY short adjustments
          1. by  Kristian Kerr, Sr. Currency Strategist 

          USD/JPY short adjustments

          Tuesday, Feb 9, 2016 7:20 am EDT

          Global macro, technical analysis, cyclical analysis & market geometry

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          In retrospect I probably took profit on half my short position in USD/JPY last week too early. However, I am pretty mechanical on the money management side of trading and I view that “lost profit” as the cost of staying unemotional. Technically the break of last month’s low puts the exchange rate in an obvious precarious position (long -term H&S pattern) that raises the risk of a much more aggressive slide. I am glad I still have half on. The next zone of importance on the downside looks to be 114.55/35 as this marks a nice convergence of the bottom of the 1-year standard deviation channel, the 9th square root relationship of the 2015 high and the 127% extension of the late January advance. An oversold bounce from around there would not surprise, while a break below would likely confirm that a more significant decline is indeed underway. read more

BoJ Makes Stealth Move to Negative Rates, Pressure on to China

DailyFX.com –

BoJ Makes Stealth Move to Negative Rates, Pressure on to ChinaBoJ Makes Stealth Move to Negative Rates, Pressure on to China

Fundamental Forecast for Yen:Neutral

Confidence is a pretty important thing in a financial system. After all, in a fiat-based monetary system, all that we really have is faith. There’s no gold or silver backing the currency, and while I’m not saying that’s a ‘good’ thing since pretty much all of those regimes have failed, faith is of utter importance because, should trust wane investors may just sell out of your currency at an uncontrollable pace. This could lead to significant currency weakness as investors flock to anywhere but your currency, and all of those goods that you have to import all of the sudden begin to get very, very expensive. This is one of the reasons that negative rate-regimes have been avoided for so long: It could be potentially playing with fire (the inflationary kind). And this inflation isn’t of the ‘healthy’ variety. Just ask Russia. This even began to show signs in Canada earlier this week with reports of the Great Cauliflower Crisis; where four simple heads of Cauliflower could buy a full barrel of Oil. But this isn’t about cauliflower; we’re talking about history here. read more