Short USD/JPY trade and comments 5-6 June
Tue 6/6/2017 12:54 PM MDT
Real Time AmpGFX – lowering USD/JPY s/l
Position
Short half unit USD/JPY at 110.10; s/l 109.83; t/p 105.58
Comment
Keeping risk in this trade relatively tight. We are not dogmatic on the outlook for the USD, we see political risk, but US economic data is still consistent with rising US rates.
Note that my stops operate on a buy-if-bid at the s/l level
US Treasury yields are now sitting right on their key support level. (uptrend and 38.2% fibo retracement)
USD/JPY resistance we are looking to hold is 109.60 or 109.73. Although a break baack above 110 to 110.10 might be more indicative of a reversal in trend
Mon 6/5/2017 7:38 PM MDT
Real Time AmpGFX – JPY comment and orders
I discussed earlier today and in the AmpGFX report on Friday my concerns that the political risk in the US may be playing out through USD and US yields.
It may be premature selling ahead of the FOMC next week where I fully anticipate that the Fed will hike.
However, the poor trading performance of the USD on what could have been seen as a strong labour market report on Friday may be highlighting deeper troubles for the USD.
As discussed this may reflect fading confidence in the Trump administration.
The market may even be starting to respond to the poorly advised tweets, such as criticising the London mayor and about his Travel ban.
The start of the roll out of infrastructure spending plans have ominously failed to ignite any confidence in US construction and engineering stocks that fell 1.4% today.
Comey is up on Thursday and this is an immediate risk.
The market is perhaps more seriously worrying that the administration will not be able to navigate the debt ceiling issue and a new funding bill coming into focus. There will be pressure for some action on the debt ceiling before Congress recesses for the entire month of August.
110.00 is a key level, so selling here is looking for a break that may see an acceleration lower.
As also mentioned in the AmpGFX report, JPY is starting to break its tight correlation with Japan equities, which may also reduce Japan govt alarm with a stronger JPY and could indicate a shift in foreign investor attitudes towards hedging Japan equities.
Labor Cash Earnings data in Japan were above expected, including scheduled (underlying) earnings, a small factor that might also improve the case for the JPY.
A key for USD/JPY remains US yields, and the 10yr yield like USD/JPY is flirting with a key support.
US CPI data next week, same day as the FOMC, may also play a part in US yields and the USD/JPY
Position
Short half unit USD/JPY at 110.10; s/l 110.58; t/p 105.58
Mon 6/5/2017 7:09 PM MDT
Real Time AmpGFX – sold USD/JPY
Sold half unit of USD/JPY at 110.10
Comment to follow