Short EUR/JPY (from 21-Aug to 23-Aug)
stopped out on 23-Aug
Real-Time AmpGFX – sold EUR/JPY (to re-establish short) (Tue 8/21/2018 2:21 PM MT)
Sold half unit EUR/JPY at 127.75 to re-establish a short position
We were stopped out of our short EUR/JPY position earlier today (s/l level 127.53, executed at 127.56), but have decided to re-establish this position.
Our sense in that we have seen a significant retracement in the EUR/USD and EUR/JPY, and further upside may be limited.
Our rationale for the trade remains. EUR upside should be limited by significant risk of negative fallout from political, financial and economic risks in Italy and Turkey, and US sanctions on Iran, Russia and Turkey.
On the other hand, we also see a risk of negative feedback on still buoyant confidence in the US economy and financial markets from financial stress and economic uncertainty abroad. Combined with more concerted efforts by China to stabilise its financial markets and economic growth, this may support the JPY.
Political risk may also be increasing in the US as we approach the mid-term elections and Trump faces the ongoing threats and distraction from the Mueller investigation, including reports that Cohen is cooperating with the Mueller investigation.
These ideas were discussed in our AmpGFX report yesterday (https://ampgfxcapital.com/reports/usd-facing-a-negative-feedback-loop-jpy-placed-to-benefit-more-than-eur/)
As such, we thought we would try this trade again.
Short half unit USD/JPY at 110.17; s/l 111.23; t/p 108.23 (AmpGFX estimated capital at risk 0.48%)
Short half unit EUR/JPY at 127.75; s/l 128.68; t/p 122.68 (AmpGFX estimated capital at risk 0.36%)
Real-Time AmpGFX – sold EUR/JPY (Mon 8/20/2018 4:02 PM MT)
Sold half unit EUR/JPY at 126.43
The outlook for further upside in the EUR is seen as limited considering the negative outlook for Turkey and Italy. US Sanctions on Russia, Iran and Turkey may also be seen limiting EUR upside.
The USD may be challenged by perceptions that weaker global markets and sentiment should begin to feedback negatively to the US economy and policy outlook.
Comments by Trump on currency and Fed policy may also undermine the USD.
JPY may benefit from more stable Asia EM markets into new US-China trade talks and possibly from a weaker USD on softer US yields
Short half unit EUR/JPY at 126.43; s/l 127.53; t/p 122.53
Short half unit USD/JPY at 110.17; s/l 111.23; t/p 108.23