Betting on Uncertainty - making 60 pip profit

Announcement of a rescue plan by the Treasury Secretary Henry Paulson – aiming to clear the banks' balance sheets – helped U.S. indexes to rose nearly 7 percent in the last two days of previous week. The plan must be passed by the congress when some members, especially from the Democrats, look reluctant to give the Treasury that huge power without making progress on their own policies.

It seems the bill will be passed but no earlier than this Friday. It is also noticeable to remember that the last week gains in equity indexes are mostly thanks to banning of short selling in the U.S. and some European and Asian markets.

In this environment I think the U.S. dollar could suffer in the medium term. The market will be flooded by $700B in coming months should the plan be executed.

But for this Monday, I found it a good time for buying Yen: 1- I thought that this uncertainty will affect the market sentiment negatively. 2- I also see that most of the optimism is priced at least in a daily-basis

I sold USDJPY at 107.07, making 60 pips profit when I closed it at 106.47. In my view, there are still much more room for appreciation of Yen (not just against dollar) in a week that is full of uncertainty and likely negative economic data.

Coming back with profit!

It was about two weeks that I had no trade. I sold USDJPY at 107.13 after U.S. market close. It was when:

• U.S. Indexes dropped more than 2.5 percent on fear of negative impact from job losses
  Jobless claims rose to 444k, about 15k more than estimates
• ADP Employment Change showed 33K decline which made the market more worry about the Friday's Employment Report
• Improvement in ISM Service index and Non-farm Productivity both overshadowed by negative reading in jobs market

I bet on continuing negative sentiment ahead of tomorrow's Employment Report, but the position resulted in 47 profit very soon when it automatically closed at 106.65 as early as the New Zealand market's open.