Alcoa Corporation (AA) stock forecasts

Summary

We’re a bit out of sorts today as the Bank of Japan (BOJ) raised interest rates. Why do we bring this up? The BOJ raised rates last July, leading to a weak US stock market as the yen’s carry trades were halted. This led to the selling of high-growth US stocks bought by borrowing the low-interest Japanese yen. Investors built up a huge yen short position – and the unwinding of that created some real panic in US markets. From July to September, the yen was strong, leading to a quick-but-sharp decline in stocks until early August. The exception this time around was when the yen was depreciating between May and July last year, with traders’ commitment (COT) data for the Japanese yen turning out to be extremely bearish, predicting a move higher for the Japanese currency. And as we said, there was also a big short position in the yen. Neither of these two conditions exists today. The current COT data is slightly higher for the yen and not set up for a big move. Interestingly, the COT data reversed course for the US Dollar Index (USD) last month, trading defensively (smart money) and large speculation (M).