USD/JPY: Waiting, waiting, waiting…

We are sitting just below what many see as a pivotal short-term directional level at 100.00. Hedge funds have returned from their August holidays with a strong desire to drive this pair higher so we will have to wait and see what their conviction is like. The short-term market is probably long already but they are hoping that corporate demand is strong enough to trigger option-related stops above 100.10.

I’d still prefer to be long rather than short but I don’t like trading static markets so prefer to wait until the movement gets underway.

  1. hi sean, do you have any idea how pairs would break out if equity weakness kicks in? i like to trade by assuming the most probable future scenario that might break out.Iv weighed out quite a few and the one that attracts me the most is short DJIA. Now i believe this may or may not lead to strength in oil and gold, but dollar strength is highly probable. hod does that work out for the Usd/jpy?? Imo the pair hasnt been driving by yen weakness and it mostly wont be till the oct2 sales tax confirmation. So supposing equities do break down ( the catalyst could be anything, need not be war) => dollar strength=> risk off=> fade usd/jpy?
    thank you

  2. Hi Rahul, if you like the lower stocks/ higher USD scenario thn lower AUD/USD is the ‘logical’ trade. Normally risk off means Yen crosses lower so whilst the USD might rise, it might not do so against the JPY. I would avoid trading USD/JPY in this scenario as picking swings becomes v difficult imho

  3. Hi Sean,
    USDJPY crossed 100 on 09/05, the first time in 2013. After consolidation, it again crossed 100 on 05/09 (day and month reversed), hopefully the last time in 2013.

  4. Hopefully not Tom, I am still long! Interesting trivia there.

    Sean, short term players won’t have been impressed, but personally I’m waiting for the NFP lottery to be done and dusted before selling more JPY. I’m hoping for a horrible number to do a bit of a clean out. I’ll happily be adding on a dip below 99 (I want to buy the antipodean JPY crosses on a dip as well). If the number is good I will wait and see what the stock market / risk sentiment thinks. I want this whole taper uncertainty out of the way.

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