11 Oct 2013
Yen still looks like a sell on strength, timing still tricky
FXstreet.com (Barcelona) - The market reaction to the headline that Obama had rejected the Republican proposal to raise the debt ceiling for 6 weeks from Oct 17 deadline, has so far been taken with a grain of salt.
The immediate reaction by Yen crosses and US equity futures was to sell-off, however, lack of follow through ever since the headline was published, coupled with other contradictory reports quoting US House GOP leader Cantor calling the meeting with Obama ‘very useful’, adding that more conversations should follow later tonight.
While technicals should be obeyed, which in cases like the EUR/JPY bullish momentum has been paying off handsomely, be aware that moves over coming days are still going to be determined not so much on technical readings but on a headline-by-headline basis.
Ultimately, the only scenario conceivable unless an unprecedented US default occurs would be to bet for any sort of catastrophe to be avoided, thus the Yen should be sold-off. The tricky part, however, is that the Democrats may be pushing for further concessions - still room until Oct 17 debt limit deadline - before agreeing on a short term debt raise compromise, thus making it hard to predict the timing of selling those Yens.
According to the latest Wall Street Journal/NBC News poll, support for Republicans stands at a 20-year low, which suggests the Democrats have the upper hand to seek further concessions. As Eamonn Sheridan from Forexlive notes: "One thing that does seem clear, though, poll results like this are likely to embolden the Democrats side."
The immediate reaction by Yen crosses and US equity futures was to sell-off, however, lack of follow through ever since the headline was published, coupled with other contradictory reports quoting US House GOP leader Cantor calling the meeting with Obama ‘very useful’, adding that more conversations should follow later tonight.
While technicals should be obeyed, which in cases like the EUR/JPY bullish momentum has been paying off handsomely, be aware that moves over coming days are still going to be determined not so much on technical readings but on a headline-by-headline basis.
Ultimately, the only scenario conceivable unless an unprecedented US default occurs would be to bet for any sort of catastrophe to be avoided, thus the Yen should be sold-off. The tricky part, however, is that the Democrats may be pushing for further concessions - still room until Oct 17 debt limit deadline - before agreeing on a short term debt raise compromise, thus making it hard to predict the timing of selling those Yens.
According to the latest Wall Street Journal/NBC News poll, support for Republicans stands at a 20-year low, which suggests the Democrats have the upper hand to seek further concessions. As Eamonn Sheridan from Forexlive notes: "One thing that does seem clear, though, poll results like this are likely to embolden the Democrats side."