The Future of Foreign Exchange Markets, Episode 118 [Tomotaro Tajima]
Tomotaro Tajima Profile
Economic analyst. CEO of Alfinaunts. Born in Tokyo in 1964. After graduating from Keio University, he worked at the current Mitsubishi UFJ Securities and then switched careers. He analyzes and researches a wide range from finance and the economy in general to strategic corporate management, and even individual asset formation and fund management. He serves as a lecturer for lectures, seminars, and trainings hosted by private companies, financial institutions, newspapers, local governments, and various commerce associations, delivering about 150 lectures per year. He has contributed to serial writings and comments in many print media, including Weekly Gendai “The Rules of Net Trading” and Examinina “Money Maestro Training Course.” He also writes columns on stocks, foreign exchange, and more on numerous websites, earning high regard as a stock and FX strategist. He is also a contributor to the Home Economics section of the Free People’s Society’s “Kiso Chishiki of Contemporary Terminology.” After regular appearances on TV (TV Asahi “Yaju-ma Plus,” BS Asahi “Sunday Online”) and radio (MBS “Tatsumi’s Asa-ichi Radio”), he currently serves as a regular commentator on Nikkei CNBC “Market Wrap” and Daiwa Securities Information TV “Economy Marche.” His major DVDs include “Super Easy: Tomotaro Tajima’s FX Introduction” and “Super Easy: Tomotaro Tajima’s FX Practical Technical Analysis.” His major books include “Wealth Review Manual” (Pal Publishing), “FX Chart ‘Formula for Profit’” (Alchemix), “Why Can FX Make You Asset Rich?” (Text), among many others. His latest book is “How to Profit by Riding the Rising U.S. Economy” (Free People’s Society).
*This article is a reprint and rewrite from FX攻略.com February 2020 issue. Please note that the market information described in the text may differ from current market conditions.
U.S. stock indices reach new highs, but the dollar-yen remains heavy
In the previous update, regarding the outlook for the U.S. stock market, it was stated that “3200 points around the S&P 500 might reasonably become the next upper target in the longer term,” and whether the dollar/yen can decisively clear the 109 level depends “primarily on whether major U.S. stock indices move to new all-time highs.”
In fact, the S&P 500 rose to 3142 points, and the Dow Jones Industrial Average continued to reach new highs day after day. This was largely as expected, but the upward movement of the dollar-yen remains notably heavy.
As of writing, the dollar-yen has not clearly broken above the 200-day moving average or the 109 level, and has been moving at nearly the same level as a month ago. This can be attributed, for better or worse, to the fact that “the progress of U.S.-China trade negotiations from late October for about a month hardly changed.”
As is well known, the Asia-Pacific Economic Cooperation (APEC) summit originally scheduled for November was canceled due to pro-government protests in Chile, and as a result, the U.S.-China summit was postponed.
Beforehand, it was expected that the leaders would sign a first-stage trade agreement at the Chile summit, but some believed that finalizing the agreement would not be in time. In that sense, the cancellation of the APEC summit may have been a favorable outcome for both countries.
In fact, as the end of November approached, signatures on the agreement had not yet been made, and the location and schedule for the next U.S.-China summit had not been decided. Still, related news continues to be reported in various forms, and the coverage essentially conveys that both sides are trying to reach a common understanding on the key issues to be resolved, so the U.S. and Japanese stock markets have maintained a hopeful outlook for progress.
Of course, U.S. stocks are also supported by low U.S. interest rates, which was reinforced by the FOMC decision in October to cut rates for the third time this year as expected, and by then-Fed Chair Powell's remarks and congressional testimony, which were perceived as relatively dovish.
Powell, while acknowledging that U.S. consumer spending remains resilient, also stated that the Fed would “act appropriately” to support economic growth and did not close the door on further rate cuts.
