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Today, we’re opening a new bullish trade on the CurrencyShares Japanese Yen Trust (FXY). The value of the Japanese yen (JPY) has been falling compared to the U.S. dollar (USD) during the past few weeks as rumors of Ben-Bernanke-encouraged “helicopter money” flowing into the Japanese economy have been swirling.
Just a few days ago, rumors were circulating that the Japanese government, funded by the Bank of Japan (BOJ), was going to unleash a 20-trillion JPY fiscal stimulus plan (the previous rumors were for 10 trillion JPY). This has pushed FXY lower. However, we’ve heard this story before, and if it plays out like it has the past few times, FXY is poised to jump higher during the next few weeks.
We don’t believe the Japanese government or the BOJ are going to move forward with a program anywhere near the magnitude of these rumors because they have hit a point of diminishing return in their monetary stimulus programs. They just can’t push the JPY down much farther. That’s why FXY has been steadily rising since early 2016.
Buy to open the FXY September 93 Calls (FXY160916C00093000).
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