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Big Trade USDJPY Long 01.06.2016 +50
1/8 -- Take profit on USD/JPY here at 118.70 for +50 because average hourly earnings was weak . reaction may not last
1/6 -- Order to Buy 1 Lot USD/JPY at 118.20 TRIGGERED
1/5 -- Place Order to Buy 1 Lot USD/JPY at 118.20
Place Order to Buy 1 More Lot of USD/JPY at 116.28
Stop for ALL at 114.35
The meltdown in Chinese stocks has meant significant losses for USD/JPY. However last night’s actions by the Chinese government to support its sinking stock market through a short sale ban for major investors and buying of equities by state controlled funds shows how responsive China will be to disruptions in their markets. While the Shanghai Composite Index opened down 3% overnight, it rebounded to close down only -0.26%. The markets are nervous but between China’s actions and the stabilization in their stock market, we believe that the slide in USD/JPY should come to an end soon. U.S. policymakers remain optimistic that the impact of China’s rout on U.S. markets is limited. The Fed may be less discouraged to raise rates again in this environment but no one expects another rate hike until March so they won’t be talking down rate hike expectations so early in the year. In other words, monetary policy divergence still favors USD/JPY in the long run and these could be bargain levels to buy USD/JPY.