This is is tricky but the BoJ is likely to set to bring further easing attempts – possibly rate cuts to help steepen Japan’s yield curve, as we all know rate cuts are stocks positive. Investors are forced to take risks to increase return, and in this particular case, they have to, because Japan has negative yields.
We also see this week a possible de-escalation of risk-off scenario what can prop USDJPY UP! Nikkei and USDJPY are positively correlated, as you can see in the chart below:
The Nikkei COT data is not at extremes but we have things to consider:
Big speculators are net Short
They added to Short
Ok how this is good? Well, few people now that markets were not made to speculators, but to Commercials and the former has an interesting behave, they trade against the trend, and the reason for this is they are not interested(not completely true) in profit from markets, but rather hedge costs, future payments and so on. So it’s very rare you see Commercials buying in an uptrend, but this time(it’s different?) looks to me speculators are adding to losers and commercials have trapped them.
The COT data is gathered till Tuesday and published on Friday, which makes me believe these speculators were betting in more bad numbers for the USA on Friday, at proves wrong. We already saw price reacting from a daily demand zone, so I think this move will accelerate next week squeezing more shorts.
Limit Orders at 21552.6
We also see this week a possible de-escalation of risk-off scenario what can prop USDJPY UP! Nikkei and USDJPY are positively correlated, as you can see in the chart below:
The Nikkei COT data is not at extremes but we have things to consider:
Big speculators are net Short
They added to Short
Ok how this is good? Well, few people now that markets were not made to speculators, but to Commercials and the former has an interesting behave, they trade against the trend, and the reason for this is they are not interested(not completely true) in profit from markets, but rather hedge costs, future payments and so on. So it’s very rare you see Commercials buying in an uptrend, but this time(it’s different?) looks to me speculators are adding to losers and commercials have trapped them.
The COT data is gathered till Tuesday and published on Friday, which makes me believe these speculators were betting in more bad numbers for the USA on Friday, at proves wrong. We already saw price reacting from a daily demand zone, so I think this move will accelerate next week squeezing more shorts.
Limit Orders at 21552.6