Japan is going to start QQE Program.

The U.S. dollar index which is measure by the DXY looks like it’s going to try to break the 100 mark. This comes after the BoJ announcement of monetary easing program call QQE.

QQE program stands for Quantitative and Qualitative Monetary Easing with a Negative Interest Rate. QQE is to achieve a price stability of 2 percent at the earliest possible time.

The BoJ bank is going to pursue monetary easing by making full use of three dimensions which are: quantity, quality, and interest rate.

Interest rate dimension: The bank will apply a negative interest rate of minus 0.1 percent. It will cut the interest rate further into negative territory if judged as necessary.

Quantity Dimension: The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 80 trillion yen.

Quality Dimension: The Bank will purchase Japanese government bonds (JGBs). The bank will purchase exchange-trade funds (ETFs) and Japan real estate investment trust (J-REITs). As for CPI and corporate bonds, the bank will keep on purchasing them on the same rate.

QQE with a Negative Interest Rate program is aim to achieve price stability target of 2 percent as long as it is necessary for maintaining that target in a stable manner. The bank will examine risks to economic activity and prices, and take additional easing measures in terms of three dimensions – quantity, quality, and interest rate.

At January 29, 2016, 5:03 p.m. EST. the DXY is at 99.53. This is a .95 percent increase from its previous close. The S&P 500 also increased by 2.48 percent. This is after a 2.80 percent increase of the Nikkei 225 and a 2.56 increase of the FTSE 100 index.

With the QQE program there is a high probability of increases in the securities markets and the U.S. Dollar. There were also increases in commodity based currency like the Australian Dollar and Mexican Peso, which is normal because the BoJ wants to create inflation of 2 percent. Inflation at 2 percent is the goal for most of  central banks. My financial base strategy is to go short on the yen and long on securities and more risky assets. It seems the investors are willing to in invest in more risky assets like securities to lure profitability. The VIX index which sometime is called the fear index, is at 20.20 a 9.90 percent decrease. 

Friday, January 1 2016

The US Dollar index that is measure by DXY hasn’t been able to break the 100.00 mark. On January 15, 2016, 3:23pm EST, DXY stands at 98.88 that’s -0.19% from the previous day. Even though The FED has started it’s expansion policy and the overnight interest rate has gone up to 0.50 from 0.25, the DXY index is having trouble breaking the 100.00 nark.

The FED is planning to increase their interest rate throughout 2016 unless economical indicators like low inflation or a worsening job market arises. The increasing of the FED’s interest rate creates a high probability of a bullish DXY. The bullish trend would cancel if we still have good economic data from the US like increase in interest rate and the DXY not breaking the 100.00.

Commodity currencies like the NZD and AUD have been dropping along with the security markets and are expected to continue dropping for the short to medium time. 

I’m still bullish on the dollar especially with the commodity currencies, but I’m precarious about being at the end of the trend. Our incoming data are indicating that we might be hitting the end of the trend and we are planning accordingly to maximize profit.