Wednesday, April 20, 2016

USDJPY flying now. I called it April 7 when Japan announced its fiscal stimulus.

In my MMT Trader report of April 7, I recommended going long USDJPY. That trade now has a 200 pip profit.

That week, Japanese Prime Minister, Shinzo Abe, announced that the government would "front load" the nation's public works' spending to the first half of FY 2016, which has just begun.

Fiscal stimulus. Bearish for yen.

The yen had a huge rally leading up to that announcement. It started around Jan 28 when the BOJ went, stupidly, to negative interest rates. That move was intended to push the yen down, but it did the opposite.

The yen's rally attracted a lot of speculative long positions in the futures market. Spec longs hit the highest level in four years. Clearly, the yen was due for a selloff and the fiscal stimulus was the signal I was looking for.

Last week Japan suffered another terrible earthquake and now there is discussion of a supplemental budget for cleanup and reconstruction. This was also covered in the MMT Trader report.

By the way, it also recommended buying Japanese indices or stocks--some ADR's traded on U.S. exchanges.

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