JPY Signal- January 9, 2013

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By: Andrew Keene

Recent movement in the FXY appears to be a dead cat bounce so expect to see further selling pressure at the 113 level. The recent bounce is FXY's time moving upward for two consecutive days since December 20 and is bound to be headed lower.

Incoming prime minister Shinzo Abe has been very vocal in his call for measures to target 2% inflation, and a forthcoming policy accord reportedly includes job growth targets as well as inflationary ones.

The Bank of Japan is evaluating a revision of its current 1% inflationary target this month after easing monetary policy five times in 2012. The likely outcome will be further easing as the central bank seeks to print their way out of the deflation miring the past decade.

My Trade: Buying the FXY Feb 112-109 Bear Put Spread for $.85 Debit
Risk: $85 per 1 lot
Reward: $215 per 1 lot
Breakeven: $111.15

Andrew Keene spent 10 years as an independent equity options trader on the Chicago Board of Options Exchange, during which he spent the majority of his time as a market-maker for over 125 stocks. Andrew currently trades futures, currencies and commodities. When he's not trading, Andrew appears on top business television shows including CNBC's Squawk on the Street, Street Smart on Bloomberg TV and First Business, a show that is syndicated across the United States. Andrew graduated from the University of Illinois with a degree in Finance with a concentration in Accountancy.