Thursday, January 17, 2013

Forex Stuff: Japan’s Economic Stimulus Plan

"The government’s latest plan is not all about stimulus spending though. Pressure on the Bank of Japan (BoJ) to become more aggressive in its approach to monetary policy is immense. Indeed, the recent election was seen by many as a vote on this issue.  Abe, having won, wants the BoJ to take a much more aggressive monetary policy stance (the BoJ’s balance sheet has grown little since 2006).  These include setting a higher inflation target of 2%, focusing partially on employment on top of inflation, and actively intervening in the value of the Yen.
Under threat of legislative reform to its structure and operations, the Bank of Japan has already indicated that it will heed Abe’s instructions on the inflation target, even if institutionally BoJ officials feel that demographics, not monetary policy, lie behind Japan’s chronic deflationary trends."
I heard of this yesterday morning over my work rig's radio, that the Japanese government under the direction of Prime Minister Shinzo Abe, was pledging to further devalue the Yen by 2%. So, while hurtling down I-84 in thousands of pounds of 6.5L diesel-powered steel at 70 miles per hour, I tapped an order into my Android phone and bought the USD/JPY cross. Technology is fun. :)

As of this morning and as I type this, that trade is up 8.94%, with a small portion of the profit locked in with a stop-loss order; can't lose now!

This has to be the easiest, laziest way to trade Forex that I know of: listen for the Japanese government to promise to debase the Yen, then get in and wait because they will deliver on that promise.

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