Hello Traders,
Look at this, after that diplomatic row between Turkey and US, the USD surged 4% against the TRY. That was a 7 month highs for the USD and extended gains following last week’s NFP. For those who had taken longs as per my last USDTRY post, a 600 pip take profit was hit over a 3 week USD rally.
In my opinion, the USD and JPY should continue to gain in the coming weeks now that Abe’s snap election will be held in 2 weeks. Other than Abe’s expected boost after October 22 snap election, there is a fundamental observation in that there is a broad based wage growth in the US and Japan. Today being a holiday in Japan, I expect liquidity to drop but then both currencies should appreciate in the coming sessions.
To start with, we saw that a negative NFP reading for the first time at -33K but then again, average hourly earnings improved by 0.5% while unemployment ticked lower to 4.2%. Fully aware of the hurricane’s effect, there is no doubt that September’s reading will be revised higher come next month. A further rise in average earnings plus Service sector improvement on Wednesday hints inflationary pressures going forward. From the data, YoY average hourly earnings for August was revised higher to 2.7% and at that rate, it is the fastest expansion since 2009.
So far, in line with Feds expectation of a rate hike, fed fund futures tracker has put a 70% probability of another hike in December. Furthermore, at 1.5% and 2.3% the 2 and 10-year treasury bills are recovering and at the upper limit of the Fed target range. So, that is positive for USD and by extension the Yen.
I will look to buy Yen going forward. In this currency pair, there was a break below support trend line in the weekly chart as last week’s candlestick closed. So, since there is a sell signal with increasing bear momentum, a sell should be place with a safe stop loss above 88.50. This level has been resistance level in the past. Take profit at 85 is feasible.
So trade as follows:
Sell: 87.40
Stop Loss: above 88.50
Take Profit: 85
Have a good trading day.

audjpy weekly chart-09.10.2017

Source: Dalmas

usdx weekly chart-09.10.2017

Source: Dalmas

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