The Future of Foreign Exchange Markets, Episode 109 [Tomotaro Tajima]
Tomotaro Tajima Profile
Economics analyst. CEO of Alfinaunts. Born in 1964 in Tokyo. After graduating from Keio University, he shifted career from Mitsubishi UFJ Securities, where he worked, and now analyzes and studies a wide range from finance and economics to strategic corporate management, and ultimately individual asset formation and fund management. He serves as lecturer for lectures, seminars, and training organized by private companies, financial institutions, newspapers, local governments, and various business associations, with annual lecture count around 150. He has written serials and provided comments in numerous print media such as Weekly Gendai "Rules of Internet Trading" and Examinina "Money Maestro Training Course." He has also written columns on stocks, foreign exchange, and more on many websites, earning high regard as a stock and FX strategist. He also contributed to the Home Economy section of the Jiyu Kokuminsha "Kiso Chishiki" (Basic Knowledge) series. After regular appearances on TV (TV Asahi "Yajuuma Plus," BS Asahi "Sunday Online") and radio (MBS "Clever-chan's Asa-ichi Radio"), he currently serves as a regular commentator on Nikkei CNBC "Market Wrap" and Daiwa Securities Information TV "Economy Marche." His notable DVDs include "Super Easy: Tomotaro Tajima's FX Introduction" and "Super Easy: Tomotaro Tajima's FX Practical Technical Analysis." Notable books include "Asset Review Manual" (Pal Publishing), "FX Chart 'Formula for Profit'" (Alchemix), "Why Can FX Make You Asset-Rich?" (Text) and many others. His latest book is "How to Profit by Riding the Rising U.S. Economy" (Jiyu Kokuminsha).
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※This article is a republished and edited version of FX Kouryaku.com May 2019 issue. The market information stated in the main text may differ from current market conditions, please note.
Market mood turning risk-on as U.S. and Japanese stock prices rise
In the previous update, the author stated about the NY Dow average, “If it decisively breaks above the 75-day moving average, it will next target the December 3 high of 25,980 dollars.” As expected, the NY Dow average decisively surpassed the 75-day line in late January and, at the time of writing, had even surpassed the December 3 high from last year to reach the 26,000-dollar range. Moreover, on February 11, a golden cross occurred as the 25-day line crossed above the 75-day line, and since then the 75-day line has been moving upward.
The U.S. stock market is rising with more vigor than anticipated, approaching the all-time high of 26,915 dollars set on October 3 last year, within about 3% of that level. Naturally, the overall financial market sentiment has shifted toward risk-on, and even though some recent U.S. economic indicators have come in weaker, the dollar has maintained a generally strong trend.
Consequently, the Nikkei Stock Average is also testing further gains, moving above 21,000 yen since mid-February. As noted in the previous update, once the 21,000-yen milestone is clearly broken to the upside, it is not unreasonable for the medium term to eye up to around 23,000 yen. If the Nikkei continues to test higher prices, it is likely to reduce the tendency for aggressive yen buying in the market. I will provide specific targets later, but ultimately there could be some room for the USD/JPY exchange rate to move higher.
As is well known, what the market is paying most attention to at the time of this writing is the outcome of U.S.-China trade talks, and daily news of progress in negotiations is supporting stock prices. By the time readers see this article, it is expected that the U.S. tariff delay deadline originally set for March 1 will be extended. It is also said that there has been some progress on structural issues such as China's intellectual property protection. Although negotiations will still require time, it is clear that both sides do not want to push their own countries into decisive damage (and not just the U.S. under President Trump seeking re-election).
