One of our Top Trades for 2013 was short JPY/SEK with an implicit spot target range of 7.30-7.40. We entered a bearish 6M risk reversal at zero cost with spot ref 8.02. The pair is down more than 10% since we entered the trade on 5 December and the ‘target’ has been reached.
Therefore, and given the fact that JPY/SEK is trading at key technical support levels, we have decided to close the position and lock in a 6.44% profit. We remain negative on the JPY and see further downside potential in the months to come based on, first and foremost, aggressive monetary policy measures from the Bank of Japan. Therefore, we keep our long USD/JPY position open for the time being.
The key driver behind the fast decline in JPY/SEK has been anticipation of significant monetary policy easing in Japan, reinforced by the LDP victory in the general election. This is very much in line with the arguments we put forward in Top Trades; the "Bank of Japan (BoJ) is likely to step up its ultra-easy monetary policy in 2013, boosting asset purchases further and possibly also set rates below zero. We think BoJ will seriously try to challenge Fed in the global currency war."
To Read the Entire Report Please Click on the pdf File Below.
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Top Trade 2013: Short JPY/SEK Closed With Decent Profit
Published 01/13/2013, 02:38 AM
Updated 05/14/2017, 06:45 AM
Top Trade 2013: Short JPY/SEK Closed With Decent Profit
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Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
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