Update: potential USD/JPY trade

US dollar strength remains a key theme and we have plenty of data out of Japan today.

US
Source: Bloomberg

Yesterday I highlighted trading opportunities in USD/JPY on a break above ¥109.54. This would have been triggered and I felt stops would have been placed at around ¥108.40. Given US dollar strength remains a key theme and we have plenty of data out of Japan today, there is room for further volatility.

The pair traded to a high of ¥109.75 and will remain in focus today with a number of releases out of Japan. Today we receive August retail sales, industrial production, unemployment rate and household spending. At 11.30 AEST we get average cash earnings – these are expected to have tapered off from the previous month, which had seen a spike due to bonus earnings.

Japan would want to see earnings growth catch up to inflation and contribute to the recovery. Any data misses would likely see further yen weakness in anticipation of more stimulus. Should the run continue, a potential target would be at ¥110.73 – the point where August 2008 highs come in.

USD/JPY
Click to enlarge

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.