The Japanese election resulted in a landslide victory for the conservative LDP which governed Japan for almost 50 years until they lost the election in 2009 (Japanese Election creates Gap in Yen). Market participants took the return of ‘Abenomics’ as a reason to send the Yen on a rollercoaster ride this week which ended on a positive note from a chart perspective.
Japan continues to suffer from its recession it initiated after its massive financial bailout in the late ‘90s which it claimed was necessary in order to keep the global financial system intact. Over 20 years later Japan has not been able to recover from that assumption and continues to feel the negative impact of that policy misstep.
Japan’s ugly stepsister, the U.S., ran out of time to reach a deal on the fiscal cliff, but Republicans made a final offer to Mr. Obama and his socialists which their elected leader refused (Obama refuses Republican Tax Offer). The offer made by Speak of the House Boehner was a tremendous gamble on his political career as Tea Party supported Republicans will revolt against higher taxes for anyone. Boehner made the offer to allow tax increases for Americans who earn over $1,000,000 per year.
In Europe, Italian central bank chief Visco claimed that Italy will make it through the debt crisis without the ECB and its austerity measures attached to OMT’s (Visco claims Italy does not need ECB). The ECB worked hard on what they thought markets wanted to see, but failed to realize that the way they have created it is not what anyone was hoping for. It is comparable to what GM used to do. They knew people wanted cars so they build cars they liked and nobody purchased.
Overview of profits for the week which ended December 21st
EURNZD: 76 pips
NZDUSD: 138 pips
USDCAD: 24 pips
Total: 238 pips
Tuesday, December 18th
USDCHF Long Recommendation
We recommended a long position at 0.9170 with a take profit level of 0.9240 (USDCHF Dances around Support). This pair has moved marginally lower and we advise traders to execute this trade as recommended.
EURUSD Short Recommendation
We recommended a short position at 1.3175 with a take profit level of 1.3100 (EURUSD Forms another Top). This pair has moved slightly higher and we advise trader to execute this trade as recommended.
Exit from trades of previous weeks
EURNZD Long Position
We closed our open EURNZD long position at 1.5575 for a profit of 76 pips. We opened this trade on December 11th.
NZDUSD Short Position
We closed our two open NZDUSD short positions at 0.8273 for a profit of 138 pips. We opened those trades on November 29th and December 10th respectively.
USDCAD Long Position
We closed our open USDCAD long position at 0.9946 for a profit of 24 pips. We opened this trade on November 27th.
We had a total of two trading recommendations this week, both remain open. We closed three older positions for a profit of 238 pips which equal our profits for the week.
In addition to our two open positions from this week we carry five open positions from previous weeks. We have four open USDJPY short positions which currently carry a floating trading loss of 2,622 pips. This represents an increase of 424 pips compared to last week. We advise traders to remain in this trade as recommended with a take profit level of 79.50.
We have one open NZDJPY short position which currently carries a floating trading loss of 97 pips. This represents a decrease of 132 pips compared to last week. We advise traders to remain in this trade as recommended with a take profit level of 68.00.
We have one open GBPUSD short position which currently carries a floating trading loss of 128 pips. This represents a decrease of 4 pips compared to last week. We advise traders to remain in this trade as recommended with a take profit level of 1.6050.
We have two open CADJPY short positions which currently carry a floating trading loss of 973 pips. This represents an increase of 6 pips compared to last week. We advise traders to remain in this trade as recommended with a take profit level of 81.30.
We have three open AUDJPY short positions which currently carry a floating trading loss of 1,126 pips. This represents a decrease of 305 pips compared to last week. We advise traders to remain in this trade as recommended with a take profit level of 85.00.
The Japanese Yen has stabilized this week and total trading losses related to Yen trades has decreased slightly by seven pips to 4,818 pips. We expect to see more significant decrease during the final trading week of the year which will be shortened due to Christmas. Traders should remain in those trades until they reach the predicted take profit level.
We hope that you will enjoy your weekend and that we will see you back on Monday.
