USD/JPY jumps above 105 on helicopter sounds


It is quite a weak week for the yen. The Japanese currency began the week with a plunge: PM Abe’s LDP won more seats in the upper house and talked about a stimulus package. This pushed USD/JPY above 102 and the pair never stopped there.

And now we have a move above resistance at 105. This is inspired by admission that “helicopter money” is indeed on the cards, after a few denials.

What does helicopter mean? In Japan’s case, this could turn into the BOJ printing money to buy government bonds, out of market and not necessarily handing out money to consumers. This is also called “perpetual bonds” or basically something that will never have to be paid and has no maturity date.

The risk is of course inflation, but Japan is mired in deflation for a very long time, and recent QE efforts are fruitless. The BOJ increased its bond buying and is already crowding out investors. Will this policy come into effect? Maybe not so soon, but the mere talk is already pushing the yen lower, and this is great for Japanese exporters.

USD/JPY is currently trading at 105.40, down from a high of 105.75 but nearly 100 pips on the day. The next line of resistance is 106.10 and 107.65 is the next level. We are basically erasing the Brexit fall on safe haven flows.

Here is the chart:

USDJPY rises July 14 2016 helicopter money

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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