RBC Trade of the week: Long USD/JPY

From the FXWW Chatroom – This week brings most of the remaining first-tier data releases and Fed speakers (November payrolls and Yellen’s testimony) ahead of the September 16 FOMC meeting. Once these hurdles are cleared, we think it more likely the ~70% probability currently attached to a 
December hike will rise toward 90% than fall toward 50%. Rising Fed hike expectations 
have so far generally been accompanied by rising risk appetite (the mirror image of the 
September experience) and if this continues we expect a combination of USD strength and 
“risk-on” markets this week, with the latter further supported by aggressive ECB easing. 
This should be a constructive background for USD/JPY pushing through the November 
highs. 
 Long USD/JPY position established at 122.82 
 Target 125.00 
 Stop at 121.60 

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