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USDJPY Breaks Key Technical Support: Next Target 118.96 According To Goldman
After valiantly defending the 121 level, moments ago what is perhaps the most important carry currency for the US stock market dipped below and is now trading at fresh lows not seen since May.
Among the factors cited for today's weakness, the primary one is China. Overnight DZ Bank said that "worrying" developments in China seem to be turning yen into favorite place to be as safe haven both globally and within Asia. It adds that "rising foreign purchases of short-term JPY debt would suggest that investors are currently viewing yen as safe haven."
Whatever the reason, the one pair that has been stable as a rock in recent weeks, and which provided a key support to the market, is now sliding. Where does it go next? According to Goldman's technical analyst Sheba Jafari there is a long way down at this point, all the way to just under 119 where the next support level is.
From Goldman:
The next level to focus on is 121.06 where the 100-dma and an ABC from the Jun. 5th high converge. A break below that point will further imply that the decline since June isn’t actually corrective at all but rather something more impulsive. If this is true then the next likely target should be down at ~118.96; a 1.618 extension from the June high. This level is also near to the 200-dma which is at 118.51 and rising.
If accurate, it means US stocks will likewise take out the all important 200-DMA support level as well, from which point on the PBOC may just sit in a conference room with the BOJ, SNB, ECB and Fed and decide what the best course of action to stabilize stocks is next.
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Bring that to about 115, what would markets look like then?
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now is the time to BTFD. Always do the opposite of what Goldman tells you.
Is that Stolper's call? Because if it is.... well you know....
Edit: never mind;
Stolper Is Stolpered Out: Goldman's Chief FX Strategist Leaving The Firmhttp://www.zerohedge.com/news/2014-02-11/stolper-stolpered-out-goldmans-chief-fx-strategist-leaving-firm
Same rule probably applies.
I think I'm turning Japanese
Easy to see another tractor beam test of 122 before USD/JPY folds to 119. Just let the Chinese exchanges have a dead cat to rip apart this trade.
Trading halted on NYSE floor http://www.cnbc.com/id/102806720
Yes, but no. The squid is alwyas looking at the Big Picture. If USD/JPY breaks down then JPY/GLD also breaks down and that could be a bigger problem for them with their relaionship wiith The Fed?
Banzai....
the big danger is a 1987 type dollar devaluation. hopefully it won't flash crash because the ppt is on it.
"investors are currently viewing yen as safe haven." Mission Control, we have a problem.
do you think the brics are investing in dollars as a safe haven? it is just war. the euro and dollar are being isolated by the brics. the yen is safe because its biggest trading partner and currency swap buddy for japan's current account is china. despite the stock market return to post bubble equilibrium(the fastest bubble to be created and popped) china money is becoming guaranteed money(gold backed).
I have no figures, but there's probably a lot of money formerly invested in China that's coming back to Japan.
dupe
is gold pegged to yen carry trade?
appears so
It's also broken the 20week MA and put in a weekly sell signal. Get to work team ABRODA.
I know they're not friendly with each other, but Isn't China closer to Japan than the US?
Goodbye carry trade
Maybe, but I think this plunge (Nikkei futures off another 6% today) will be the impetus for the next QQE expansion.
Goldman's off on this one. The better support is 120.11, 61.8% of the plunge from 147.65 to 75.56 that began in 1998.
http://pebblewriter.com/update-on-the-yen-jul-8-2015/