The USD/JPY pair fell hard during the session on Thursday, but did bounce off of the 104.50 level in order to form a somewhat supportive looking candle. Quite frankly, we think this market is going to be bought every time it pulls back, and that the writing is on the wall so to speak, as the market should continue to go much, much higher. Long-term traders have certainly come into this marketplace and started buying, and quite frankly I am very bearish of the Japanese yen against all currencies, but especially the US dollar as there is potential for further tapering out of the United States. Tapering off of quantitative easing will raise interest rates in the bond markets, which of course will have money flowing from left to right across the Pacific Ocean.
Any dip at this point time should be thought of as a buying opportunity, and that is most certainly what I am using it for. I could see some sideways action between now and next Friday though, as the illiquid market conditions continue and we await the results of the nonfarm payroll report.
Jobs, jobs, oh, and did I mention jobs?
If the jobs numbers out of the United States are strong enough, that will send this pair skyrocketing as the Japanese yen will certainly get pummeled. That’s because the markets will anticipate that the tapering off of quantitative easing can continue, which of course will widen the interest-rate differential between these two countries. Remember, the Bank of Japan has just started its newest endeavor as far as quantitative easing is concerned, and therefore probably has much more loosening to do over the next several months, if not years. That being the case, this market should continue to climb for the long-term. I have a core position and a, and quite frankly have no interest in selling this market for months, if not years. I believe that shorting the Yen will be the trade of 2014, although of course there will be point in time where the market pulls back. All things being equal, I am a seller.
