(1888PressRelease)
December 06, 2008 - We here at FXAssetManagement.com believe the USD/JPY is trading at artificially low rate and expect a sharp whipsaw up, to at least USD/JPY 104 rate in the near term. We believe this based on technical’s ,fundamentals as well as the fact that the other three of the 4 majors paired against USD have weakened about 21% while the JPY has strengthened against the USD by about 20%.
On Tuesday Bill Gross manager of the world’s biggest bond fund at Pacific Investment Management Co,(PIMCO) said,” Stocks seem a good value within the context of the economy of the recent past, dominated by leverage, cheap financing and low corporate tax rates “
We understand this to mean stocks aren't cheap when viewed in relation to today’s environment, but maybe in the past, before credit crisis and changes from here on in. We believe the same logic applies to the USD/JPY pair, maybe in the past this disparity made sense or applied, but not today and the future.
The 3 other majors, and a flight to safety being the common theme today, both say long dollar. Any logic to be long Yen against the Dollar we believe is based on yesterdays thinking or before the world credit crisis and a return to what we would call, “simple math”. In addition Japan recently had its first monthly trade deficit in a long time.
We believe the overwhelming case lends to a violent whipsaw back to a rate of 104.00 in the USD/JPY, which is near term resistance. This would mean a move of approximately 11% still leaving about 10% differential for “yesterdays thinking”.
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FXAssetManagement.Com is a COMMODITY TRADING ADVISOR REGISTERED, NFA ID#: 0391484 specializing in Transparent, Separately Managed Accounts, they can be contacted via its website www.FXAssetManagement.com
Disclosure: The information provided in this document has been obtained or derived from sources believed to be reliable. FxAssetManagement Corporation, does not guarantee its accuracy or completeness, nor does FxAssetManagement Corporation assumes any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any foreign exchange transaction, or as personalized investment advice. In addition, any projections or views of the market provided by the author may not prove to be accurate. FxAssetManagement will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained.
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