Trading Ideas

By Musabbir Mazhar
Long USD/JPY – I’m bullish on the pair:

I believe the USD/JPY currency pair is going to go up. Why?
Fed Chairman announced FOMC’s decision on tapering 10B of Bond purchases per month – this strengthened the USD as expected. The currency pair jumped to 103.92 from 102.67 after the announcement; USD/JPY is now trading at 104.29.

USD/JPY Currency pair (Direct Quote)

The US 10 year treasury yield jumped, now yielding 2.92% -I see there is a positive correlation between the yield and the USD/JPY.

Fed Chairman announcing Fed Tapering $5 Billion in MBS and $5Billion in Treasury Securities
Japanese trade data just released showed ¥1.29 Trillion trade deficit – that means no slowing of monetary stimulus from japan as they need to finance that deficit. And as announced by BOJ Governor, Haruhiko Kuroda, BOJ will continue accomodative monetary policy to weaken the
Yen and boost exports as well as to reach the 2% inflation target within 2 years. BOJ will maintain increasing base money at annual ¥60 Trillion (576$ billion) to ¥70 Trillion.

US Housing starts increased to 1.09 million units in November, up 22.7 % – this is the biggest increase since a decade ago. This strengthens the economy and the dollar.
US ‘Core Inflation remains good at 1.7%. Also FOMC increased the projected growth rates : 2.2 to 2.3% for 2013 and rising to 2.8 to 3.3% in 2015.
It would not be surprising to see the USD/JPY at 110 or north of that in 12 months.

US 10 year Treasury yields rise at Fed Tapering news

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