The basket proposed in late 2013 to play JPY weakness has performed as expected:
The basket has benefited from a continuation in JPY weakening against USD and other global currencies. Moreover, significant alpha was created using the quantitative fundamental scoring approach and a qualitative fundamental analysis layer. The initial JPYUSD goal to close the trade was 110, yet there are 3 main reasons why an earlier exit approach is recommended. Firstly, Japanese net buying interest has been waning as macro data transpired confirming the failure of Abenomics. Secondly, Asian demand has been weakened over the last six months and, remember, more than 65% of Japan's exports are destined to Asia. Third, the quantamental scoring approach is not delivering high ratings as Japanese exporters seems to be a rather overbought theme among investors. In other words, the rationale ad risk-reward to continue playing this basket is gone from both a top-down and bottom-up standpoint and it's time to close positions and lock up profits. Disclaimer: the blog is intended to convey investment ideas and, market views , yet they are not a solicitation or recommendation to buy/sell/hold securities but merely investment ideas that should NEVER serve as the basis of the reader trading decisions. This website and its reports are for general information purposes and any investment decision should be discussed with a financial adviser before taking place. The investment ideas displayed here could have been implemented at an earlier date than the one stated at the blog's post date; for which reason the latter dates do not represent accurate and timely entry/exit points in order to protect those investors with whom the blog author has a fiduciary agreement.
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Carlos Salas
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