Monday, September 8th 2014
Bank of Japan has a 2% inflation target to combat decades of spiraling deflation. BOJ Governor Kuroda came out swinging and introduced a large scale monetary policy to support Abenomics. In an interview with WSJ today, Abe’s advisor, Etsuro Honda is urging the Prime Minister to slow down the tax increase as planned next year. However, he encouraged BOJ to take action and achieve its inflation goal and also stated that “Even if the yen weakens a little more, that will be no problem at all”. Mr. Honda believes that the effect of Japanese export will outweigh the cost of further devaluation of Yen.
Yen slumped after the statement with USD/JPY soared to multi year high (since September 2008).
Trade #1 – Long NZD/JPY at 87.430
EA took the trade at this level overnight and price bounced a long all night just above the pivot level. After the statement by Mr. Honda, NZD/JPY soared just like other Yen pairs. Closed the trade for +17 pips profit. On second thought, I think I should’ve held the trade to at least R1 at around 87.69 but I was hesitant with this pair as NZD seems to be weak and there is a supply area from September 4th at this level that might prove to be tough.
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RBNZ Rate decision on Wednesday evening.
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