Talking about how my internal pattern recognition algorithm senses something is off here with this equity bear market.
It’s scary selling USDJPY here but I think it’s the right trade. Spot is fine or buy 3-month 125 digitals, perhaps.
The USD turned right on schedule.
But successful execution is harder than just forecasting.
I want to be short USD, but not yet. In today’s piece, I explain why and where I would like to get short USDJPY and long NZDUSD.
I exited USD longs too early, obviously. No reason to go short yet but we are approaching massive levels in almost every currency.
I think we are near the end of this little inflation scare. I am no longer bearish stocks or bullish USD.
There is so much coming up in Japan over the next month or so. I am surprised that USDJPY vol is so cheap.
Path of least resistance for now seems like rates up, stocks down, and higher USD.
3.90% is a major inflection point for US yields. With Ueda speaking next week a complete coin toss, this is a good place to take profit in USDJPY.
Just because stocks haven’t reacted to higher yields yet doesn’t mean they won’t.
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