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December 31st, 2012 at 7:21 am

No Trades to Close the Year.

On the last trading day of 2012, currencies were reasonably volatile. The Yen in particular moved some distance, especially at the start of the US session. In spite of some strength on Friday, the JPY lost ground today. At about 86.35, the USD-JPY is at the highest level since summer of 2010. In addition, if it closes at around this level (and it probably will), that will mark an almost 12% rally for the year in this pair. That, in turn, would be the biggest appreciation for this pair in 7 years. Clearly, markets expect even more easing from the Bank of Japan in 2013. There could be more volatility in the last few hours of trading, depending on what happens in Washington regarding to the “fiscal cliff” negotiations.

Yesterday I discussed shorting the Yen pairs (USD-JPY and the EUR-JPY), if the downtrend from Friday continued. However, these trades would be cancelled in case of opening gaps. Unfortunately, that is what happened. The prices spiked down, and my intended entry level in the EUR-JPY was hit immediately. Within few minutes, JPY pairs started to recover, forming minor lows, which became new entry levels. Of course, those proved to be the lows for the day, so in the end these trades did not materialize. On the plus side, this outcome beats losses, so there is nothing complain about. I am officially done for the day and for the year.

I want to take this opportunity to thank everybody for his or her support, all the emails received and kind comments. Hope we all have a peaceful, prosperous and happy 2013!

Mike K.

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