Yen's rally stalls on growth projections and central bank’s policy measure

The Bank of Japan (BoJ) is sensing inflation may rub it wrong way. Thus, as a precautionary measure it will hold Monetary Policy Committee meeting on 30 April. Evaluation of semi-annual GDP and inflation forecasts are the major subjects to be discussed in this meet. The industrial production (IP) data for March is also to be release on 30 April.

With the series announcement seasons coming up, we anticipate the key numbers to be displayed as follows: Inflation forecast for FY15 (starting in April 2015 to be well under control owing to the continuation of recent downtrend in inflation. We also think it will lower its FY15 GDP growth forecast given subdued economic momentum in Q1. We expect IP to have increased 1.5% mom, in line with the pick-up in exports to the US and China.

Technical insights:On today's intraday chart, the USD targeting a peak against the JPY resulted by formation of bearish dark cloud cover and evening star candlestick patterns. In addition, negative RSI divergence boosts the box for a downside risk. Near-term resistance is at 122.01. The overall USDJPY trend started to favor the upside.

Trade theme:
Overview: Bullish (Intraday trend only, not for medium traders)
Strategy: Selling Put spread and short JPY on futures (intraday only)
Supposing to sell far month in the money put (reason being these ITM contacts yields higher premiums to pocket in by giving enough time decay), simultaneously buy same far month an ATM put option as this will cost lesser premiums as the contract is at the money contract. Thereby, one can be benefited the net credits of premiums. The caution and smart idea alerts one should be ready to book the losses suiting as per their risk appetite.