It is near impossible to sustain a strong JPY in light of; negative growth, collapse of banking sector, hemorrhaging of corporate Japan and deflation.
You will recall that we entered the USDJPY call option based on our fundamental analysis. The JPY finally collapsed from a stronghold of 87.15 and 87.10 twice in December 2008. It has been a great run and we believe that USDJPY will test the 110.50 high in August 2008; however, we are of the opinion that we will not have enough time left on our option to wait for this level to happen.
From the technical viewpoint, USDJPY has been over-sold to a low of 101.30 and it would pull back to 98.00.
We have decided to take profit on the USDJPY call option at 100.80. This gives us a profit of 3.67% and a total trading profit of 5.39% for the month.
We have strategically traded currencies one at a time as the world landscape is changing dynamically everyday, to juggle one too many currency trades is only asking for trouble.
More importantly, we will take the next week to fully digest the G20 takeaways and deliberate on our next trading and investment move in the currency market.
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