May 9th 2016: Dollar Rallies Despite Payroll Miss

• This morning, the dollar index is holding recent gains made despite Non-Farm Payroll data coming in well below expectations at +160k. The dollar’s apparent strength may be as much to do with the yen taking its foot off the gas as the USD/JPY continues its slow but steady rally.

• Other yen pairs are following suit with the AUD/JPY outperforming after heavy losses on Friday.

• The yen pairs are generally steady, with the euro showing some relative strength, especially against the pound.

• We have a relatively quiet day ahead with German factory orders at 07.00.
• Then at 08.30, we have Halifax HPI.
• We also have Eurogroup meetings running throughout the day.

Trade Idea: 

• One feature of extreme yen moves recently is that they are often reversed within a short period of time.
• The USD/JPY gains in May have been slow, but there’s still scope for further USD/JPY upside from here given recent trends.

• A good way to play this is a HIGHER trade predicting that the USD/JPY will close above 108 in 14 days for a potential return of 115%.

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