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Trade view / 09 November 2012 at 8:41 GMT

Shorting USDJPY on risk aversion

John J Hardy John J Hardy
Head of FX Strategy / Saxo Bank
Denmark

A few points on this trade idea - see full PDF description below

The JPY is the strongest of the G-10 currencies as is often the case during bouts of risk aversion and particularly due to risk aversion. The move could continue if risk appetite remains off as the market has built quite a large short JPY position.

Technically, the move back below the 200-day moving average and the weekly Ichimoku cloud level (intraweek yesterday) appear to be bearish developments. A move below the Kijun line (blue line) could trigger further downside toward key retracement levels.

The USDJPY pair offers a lower volatility way to trade the JPY strength for the moment ahead of the weekend than other JPY pairs, which tend to be more volatile, allowing tighter definition of risk/reward.

Disclaimer:
Non-independent investment research
This investment research has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further it is not subject to any prohibition on dealing ahead of the dissemination of investment research. Saxo Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. 
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03_USDJPY.pdf

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