The pre-NFP equilibrium zone 152.75/153.25 should now be the sell zone for USDJPY.
There is enough softness in US data to raise eyebrows. But not enough to conclude that anything has changed. Yet.
Today’s FOMC meeting looks binary. If hikes are back on the table, the large long USD position probably doesn’t matter as FI vol will spike and the dollar can keep running. If Powell nixes the hike side of the distribution, the USD will get thumped.
When a headline asks a question, the answer is usually no. The financial media is touting a “Japanese currency crisis”, memes are going viral, and The Economist is chirping in on why the MOF is doomed to fail. At the risk of staying wronger for longer, this could be the final innings of the yen trilemma debacle.
The Japanese Ministry of Finance showed up, but they seem to be doing as little as they possibly can to support the yen without actually doing nothing. When looking at correlations, don’t get too excited over r-squareds.
Specs have been exiting GBP shorts and putting on AUD longs. Chinese copper import premiums are at an all-time low – bearish copper.
Taking one more shot at short USDJPY, even though I got stopped out of the EURJPY short. Because all signs point to BOJ intervention, in my eyes.
Significant-looking tops in commodities may signal that we are near or past the peak in the inflation reacceleration narrative—and US yields.
First, the arguments for a China deval are reasonable but not awesomely compelling to me. Second, as time goes by, the arguments for a relationship between US GDP and US stock prices become even less compelling.
This week was not for the faint of heart as we saw a toxic mix of small, medium, and large geopolitical, macro, and idiosyncratic shocks.
Scary blowoffs like we just saw in USDMXN are usually the end of the move, not the start of something bigger.
The second half of April is likely to be much less exciting than the first half but the next few days could remain spicy as Williams says rate hikes are not off the table.
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