(JP) Follow-up: LDP-New Komeito formal coalition said to win 325 seats in 480-seat lower house of Diet – Nikkei News
(JP) PM-elect Abe said to be looking to draw up a supplementary budget of up to ¥10T for FY12/13; Japan to issue new debt to secure funds for budget – Nikkei News-
How to interpret these headlines?
With the LDP and New Komeito coalition, Abe, the PM-Elect, will have the support he needs to pass his agenda, thus it’s likely that we’ll see weaker JPY in 2013. If Abe were to keep his words, namely having an inflation target of 2.0% by aggressively depreciating the JPY, I wouldn’t be surprised to see USDJPY re-approach the 90 to 100 level.
The key to successful Forex trading is to identify moments like this, a turning point of sorts, especially for the JPY. Although I don’t expect a straight line decline, I fully expect to see gradual and steady depreciation of the yen, which makes JPY buying a big no-no. As a matter of fact, I’m calling for BUY ONLY trades on yen crosses (LONG EURJPY, GBPJPY, CADJPY, USDJPY, etc…) as the overall market sentiment, fueled by risk appetite, will add more momentum on shorting JPY.
I’d also recommend to use patience, as the trend leading up to the election has already pushed JPY to the same resistance level post BOJ intervention, which means we could see some some profit taking from the recent run up, giving us an opportunity to place our trades.
I’d definitely be looking at around the 83.00 level for the USDJPY for potential LONG entries, and you could definitely trade other yen crosses instead when USDJPY drops to the 83.00 level.
Yen Crosses Positioned To Trade Higher As Abe Wins The Election…
December 17, 2012 by 4 Comments