Yen
weakness and especially the USD/JPY trade continues to
astound. Perhaps, Teddy KGB would have said that it is “Hanging around,
hanging around. Yen weakness got alligator blood. Can't get rid of
it.” The reference to alligator blood refers to having the mental
toughness to overcome any hurdles and to keep moving forward.
Despite
all fundamental explanations on how the BOJ disappointed and countless
arguments on why this market move should pause, yen weakness is ruthless
and appears to be not be going anywhere anytime soon. Many experts
called for a corrective pullback and some targeted buying on a dip to
86.00, but at the end of the day, it did not matter as trade flows
continue to come in and helped the dollar recover from its 3-day
decline.
Everyone heard Yasutoshi Nishimura’s
comment that the he had no issue with USD/JPY reaching the 100.00
level. The Japanese Deputy Economics Minister also shrugged off the
comments that Japan was playing dirty in Currency Wars. This political
back and forth may continue for a while but yen weakness overcame a very
key technical level and price action may easily surge to 94.00 as long
as the concerns in the stock markets do not rub off on the FX
markets. If nervousness persists in the global markets, USDJPY should
be eagerly bought during any dips.
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