Thread: Discuss USD/JPY, GBP/JPY, and other JPY Pairs

58% of retail traders are long USDJPY (long to short ratio is 1.38). However, since last week, retail has been selling the USDJPY (short positions are up by 7.4%). When retail is long but reduces its exposure, the long term direction remains bearish but the market might have some upside in the short term. The SSI gives us a MEDIUM SIGNAL TO SELL USDJPY.

Originally Posted by David Rodriguez

China's government would never be foolish enough to do something like this. The beauty of economic interdependence is that we all have a vested interest in mostly maintaining the status quo. What, exactly, would China accomplish by selling its holdings in US Treasuries? Trigger a worldwide US-led recession and subsequently shoot itself in the leg as demand for its exports drop through the floor.

Exactly, but that's essentially the end result of a forced Yuan revaluation as well. In practice, I can't imagine that China would actually enact such a brash measure as to sell massive amounts of US Treasuries. They are likely trying to make a statement to try to make US legislators understand that they are setting the stage for a potentially grave economic situation on both sides.

DailyFX Carry Trade Basket

Originally Posted by David Rodriguez

China's government would never be foolish enough to do something like this. The beauty of economic interdependence is that we all have a vested interest in mostly maintaining the status quo. What, exactly, would China accomplish by selling its holdings in US Treasuries? Trigger a worldwide US-led recession and subsequently shoot itself in the leg as demand for its exports drop through the floor.

China's officials occasionally like to bluster, as pointed out. However, I continue to be amazed by the US administration's stance on international trade and the dollar. Former Secretary Snow chanted the mantra of a strong dollar policy while pressurising Asian countries to effectively weaken it. This time round, confrontation seems to be on the agenda, with Paulson banging a drum and the Trade Department taking some idealistic egalitarian view of global trade balances. In reality, the USA is importing deflation through cheaper Asian and Chinese essential goods - do Americans really want to pay more for these items?
It's always black and white hats with Washington since Bill quit. He at least had the finances turning around through better housekeeping. I would like to see this crew balancing the books better and, to quote Nixon who was at least pragmatic, "minding the store". Then they would not be so concerned about another country's currency.
If anything needs revaluing it is the Japanese yen, which is the biggest con trick on the financial planet.

How say those in the Forum?

Hello All

The action raced along to the Ganns @ 119.26-119.33 (mentioned in post 245), sailed on through with only a brief stumble, but maybe the next active Gann @ 120.55 will cause the beast to tremble.

GTA -arco

A lot of junior traders hate shorting and fear getting it wrong. A high risk strategy is to sell off a key level, after a failure to overcome and momentum has dropped overnight. This could have been done this morning London, shorting the dollar/yen at 119.70-ish on the few upswings we had overnight.

However, a conventional and safer short technique is given below, illustrating a break of support rather than an assumed failure to surmount a higher resistance.

This one would have booked you 48 pips before breakfast! See chart.

Note you would have had to ignore all the day's techno press about Ichimoku clouds, Tenkan lines and so on, all upwardly biased.

Originally Posted by terton

China's officials occasionally like to bluster, as pointed out. However, I continue to be amazed by the US administration's stance on international trade and the dollar. Former Secretary Snow chanted the mantra of a strong dollar policy while pressurising Asian countries to effectively weaken it. This time round, confrontation seems to be on the agenda, with Paulson banging a drum and the Trade Department taking some idealistic egalitarian view of global trade balances. In reality, the USA is importing deflation through cheaper Asian and Chinese essential goods - do Americans really want to pay more for these items?
It's always black and white hats with Washington since Bill quit. He at least had the finances turning around through better housekeeping. I would like to see this crew balancing the books better and, to quote Nixon who was at least pragmatic, "minding the store". Then they would not be so concerned about another country's currency.
If anything needs revaluing it is the Japanese yen, which is the biggest con trick on the financial planet.

How say those in the Forum?

I agree more or less with your observations. However, I wouldn't attribute too much praise or penalty to any one political administration - especially not a president - for the health of the economy. So often, we have seen that promising reform or attempts to balance the budget are dashed by splits between the house and senate or between congress and the executive branch.

And, even when all the branches have been lined up on one side, you still have problems and that is most likely because politicians are being politicians. When hopefuls start on the campaign trail, they make some ridiculous promises that are clearly not aimed at the long-term well-being of the US economy and its citizens (its easy to find examples ranging from current President Bush to former President Roosevelt to hopeful Senator Clinton).

I don't know whether they pass or veto this legislation because they are pressured to think about short-term vs. long-term benefits (and how it looks to their party at reelections), they have really bad economics advisers (unlikely), or they are just placating a constituency that isn't well versed in finance and economics. I have a feeling it is primarily the last one. With everyone crying out for a tax break now or immediate funding for this project or that, few are concerned with the overall health of the US economy and its relative standing to the rest of the globe. That would require too much sacrifice. And when the people that voted you in are yelling at your for more, they have no choice but to recount these demands back in Washington (if they are responsible representatives).

P.s. I'm not saying this as if I am above all of it. I fully want tax breaks and government investment in updated NYC transportation. Give me.

SSI calls for more USDJPY losses

In order to understand this pair, we must go back to last year, as I now make the following forecast and analysis:

USDJPY is ending a cycle commenced on May-17 2006, which concludes at midnight BST on Aug-28, three weeks hence. The final high of this 68w cycle was in June at 124.14 and since then we have been descending - now in five waves of an EW larger c - to the final low node, all within the eighth and last time segment.

Being since Aug-1 in a turbulent seventh smaller time segment and an EW double 4th wave, do not be surprised if the market rises again by Mon-Weds Aug-15 towards 119.90.

My low price target is a 61.8 retracement and 10-year breakout line at 115.23/28, on or before Aug-28. The lower rising trend line spoken of by many will not be respected, because of the larger time scale in operation here.

This pair is on a slightly different cycle status than EURUSD (see other thread for forecast).

According to the latest FXCM dealing data, the ratio of long to short positions in the USDJPY stands at 2.18 as nearly 69% of traders are long. Yesterday, the ratio was at 2.12 as 68% of open positions were long. In detail, long positions are 2.6% lower than yesterday and 0.9% stronger since last week. Short positions are 5.2% lower than yesterday and 14.3% stronger since last week. Open interest is 3.5% weaker than yesterday and 3.6% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

USDJPY Yield Curve differential suggests dollar could fall further

Yen implied volatility in Over the counter foreign exchange options is close to a 12 months high. This market environment, with traders buying risk protection against spot positions, suggests we may see more more big moves in the week ahead.

US Technical Update:

With risk moved to 118.25, sentiment still remains bearish as the pair continues to consolidate just a couple of pips above resistance. A formidable advance above the session high of 118.73 would negate our bearish stance, leading scope for a test of the channel resistance that has been developing at 119.29.

More analysis at

http://www.dailyfx.com/story/calenda...777671655.html

The ratio of long to short positions in the USDJPY stands at 2.08 as nearly 67% of traders are long. Yesterday, the ratio was at 2.07 as 67% of open positions were long. In detail, long positions are 3.6% higher than yesterday and 10.8% stronger since last week. Short positions are 3.3% higher than yesterday and 3.0% weaker since last week. Open interest is 3.5% stronger than yesterday and 6.1% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

Yen is weaker against all the G10 currencies and this could help carry to outperform in the week ahead