Ashika Monthly Insight August 2016

AUGUST 2016
COMMODITY MONTHLY ROUND UP
Japanese Yen
Like Gold, Yen has a reputation to be a hedging tool at
the time of asset distress but recently it’s playing havoc
with Japan’s fundamental direction. From January 2016 to
last month i.e. July 2016, the currency appreciated from
120 to 106, that’s more than 11.50 percent and off
course it’s hard to ignore as noise especially for a
country whose economy is driven by exports.
Some traders are pointing out that recent appreciation is
largely because of FED rate hike timing and BREXI.
Disagreement between OPEC members regarding crude
oil production is also playing the card. Even slight
negative news in the market sparks volatility which is
slowly affecting the investment drive of the investors.
Instead of capital appreciation they are now chasing
capital preservation which is hampering Yen’s direction
given its safe-haven element. This in turn is hurting the
price competitiveness of Japanese exports in foreign
markets which is one of the reasons for the fall in
exports. Another reason is the sluggish private
consumption in China and other Asian countries which is
Japan’s major trading partners.
Technical Analysis
June’16 low of 99 is just on 200 Daily Simple Moving
Average where it gave a nice bounce towards 106. So it’s
clear that if the market takes out 99.00, then technically
more strength may infuse to Japanese Yen against US
Dollar. But again after a spectacular rally from 77 level to
125 we can consider it as a corrective wave and that’s
exactly ends near its 50% Fibonacci Retracement level
which is showed in the chart as red line. Again taking the
help of Fibonacci retracement from the high of 125.84 to
low of 99.02, market may retest 50% retracement level
which is at 111.12. Our trading advise for the traders is to
go long in the pair above 108.40 for the target of 111.10
and the stop loss should be at 105 (recent swing low in
the Daily chart).
Weekly RSI is running just above a long term trend line
which is indicating sudden bullish move may emerge in
the market.
62