Dollar Buying Sends $USDJPY above 100.00
Sunday, May 12, 2013
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The dollar exploded higher against its major counterparts during the last week, finally pushing USD/JPY through the significant psychological resistance at 100.00. Once through 100.00, it was a quick trip higher as bulls managed to grab all the stops that had been accumulating over that key figure.
USDJPY has traded as high as 101.97 on Friday – up over 300 pips from Wednesday , Going forward, it’s hard to see much of a case for USDJPY falling back below 100.00 as the threat of the Fed tapering the US QE program looms. That tapering will certainly boost the dollar against other major currencies, and the Yen looks set to remain weak as the BOJ continues on its inflationary path .
Even major bouts of risk-off sentiment, usually a hallmark of Yen strength, should still leave the Yen well supported going forward as traders will likely continue to pile into the US Dollar on hopes of greater interest rates to come.
How all of this is affecting the other Yen crosses is very interesting. AUD/JPY, for example, the poster child for risk-on sentiment has failed to make new highs, and is in fact still trading near 400 pips below its recent high of 105, despite the USD/JPY move and despite a strong week from equities. It is possible that the Yen pairs may once again be diverging from themselves and may provide good hedging opportunities going forward. It is also possible that this underperformance from AUD/JPY and NZD/JPY are warning signs that the recent move higher in equities is unsustainable and we are due for a correction. If we do indeed see some sort of correction going forward keep a careful eye on USD/JPY and that 100.00 figure.
More update next the coming week
Ayman Khlifat on Twitter
Follow @aymankkhlifat
The dollar exploded higher against its major counterparts during the last week, finally pushing USD/JPY through the significant psychological resistance at 100.00. Once through 100.00, it was a quick trip higher as bulls managed to grab all the stops that had been accumulating over that key figure.
USDJPY has traded as high as 101.97 on Friday – up over 300 pips from Wednesday , Going forward, it’s hard to see much of a case for USDJPY falling back below 100.00 as the threat of the Fed tapering the US QE program looms. That tapering will certainly boost the dollar against other major currencies, and the Yen looks set to remain weak as the BOJ continues on its inflationary path .
Even major bouts of risk-off sentiment, usually a hallmark of Yen strength, should still leave the Yen well supported going forward as traders will likely continue to pile into the US Dollar on hopes of greater interest rates to come.
How all of this is affecting the other Yen crosses is very interesting. AUD/JPY, for example, the poster child for risk-on sentiment has failed to make new highs, and is in fact still trading near 400 pips below its recent high of 105, despite the USD/JPY move and despite a strong week from equities. It is possible that the Yen pairs may once again be diverging from themselves and may provide good hedging opportunities going forward. It is also possible that this underperformance from AUD/JPY and NZD/JPY are warning signs that the recent move higher in equities is unsustainable and we are due for a correction. If we do indeed see some sort of correction going forward keep a careful eye on USD/JPY and that 100.00 figure.
More update next the coming week
Ayman Khlifat on Twitter
Follow @aymankkhlifat
