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Forex pairs in this Article » USD, USD/JPY
Talking Points:

• There are expectations that the BoJ will expand its stimulus program response to Japan's tax hike

• Looking back over the past year, the bulk of the yen crosses' rally came in the lead up to the QE

• We are now exactly in the same part of the stimulus 'cycle' as USDJPY hovers not far from 100

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A year ago, the market began to speculate on the Bank of Japan's adoption of a massive stimulus program - a theme that eventually drove USDJPY up in value by a third. Since Prime Minister Abe confirmed a tax hike for the country come April, expectations of a 'round two' QE program from the central bank have gained traction. Looking back to the first round of stimulus, much of the yen's depreciation (yen crosses' gain) was won well before the actual program was implemented. As fate would have it, we are currently in the same point in the cycle - speculators attempting to price in an eventual systemic shift. Will this important theme drive USDJPY above 100? Can it override a meaningful distraction in risk trends in the interim? We discuss how this big fundamental drive fits into USDJPY and yen speculation going forward.

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