We all basically know that the Dow priced in QE3 when it hit 11,326 yesterday, a rally of 550-600points in 2days.., and so tomorrow afternoon when Bernanke says ''We are going to monitor inflation, keep all options open and keep very close eye on the economy (but not announce that they are starting QE3 later that evening)'' we should get a huge glorious crash in the Dow on Friday and into Monday/Tuesday... However im in quite a difficult position as im trying to workout how to play this move in terms of buying Usd/Jpy... As when this happens dollar will be dragged into strengthening, however as markets collapse the Yen will also be dragged into strengthening as money pours into it as the safe-haven. I originally went long from 76.65, with target of 80.19, have since then taken profits by scaling-down the position size as the market has risen upto 77.45 today. And my current stratergy is to leave 1 buy contract open into Bernake's speech from this level, but hope and pray that his speech caused the dollar to crash vs Yen making the market fall back to the low 76s/75 level, so i can then add 2-3 more buy contracts at that price, with overall price target of 80.19 for when the BoJ then intervenes. However im trying to workout how likely it is that his speech will simply cause dollar to rocket in strength vs the Yen, meaning i only get my 300pips profit x 1contract, not x 3-4contracts like i ideally want. So what impact do you think him failing to announce instant QE3 will have on Usd/Jpy??
I am also looking on the long side of USDJPY and currently have a position at 76.60ish. I have just been waiting for BOJ intervention as I caught the last spike a couple weeks ago for a nice +250 PIP profit. However, it is becoming more clear that the BOJ isn't going to intervene in the 76 area like it has the past two times and they recently set up some other measures to curb JPY strength. I think you will need to see a break down to the 74-75 area before you see any more direct intervention from the BOJ. Concerning the Jackson Hole conference, I think that if there is no mention of QE3, the dollar basically sits where it is against the JPY or slightly appreciates but the equity markets probably have a nasty down day. If Bernanke announces some future QE, you will see equity markets rally short term (maybe for less than a day) but you will see USD drop against all currencies. I am going to hold long (I have a large position of 20 lots) and will add more if it drops to the 74-75 area. I am planning on scaling down my position starting above 80. This is not meant to be a short-term trade as I am perfectly willing to sit in this for a couple months. Of course, this is just my opinion and could be totally wrong. I hate to admit it but I've been wrong before. Good luck on the announcement (I was also talking to me as well)