The chart below shows when we started to switch sides in yen at 149.3x on October 18th. Three days later, we had FED 'slip of the tongue' admitting being passed the mid-point in rate cycle, and finally the dollar began to cool. BOJ have no option but to move rates higher. The clock is ticking for a move under $125, unlocking $110 and $100 with the full swing.
For those following the flows over the past few years this has been a flawless carry trade, presented in a 5-3-5 corrective sequence (since multiple decades), and finally beginning to unwind.
In terms of sequencing, Kuroda is out in April, leaving behind inflation on the doorstep and probably the end of YCC. Yen longs continue to make a lot of sense over 2023, near term watch out for some profit taking at $125.
Keep short, add on better levels, $132 will cap the highs.
Thanks for sharing Pascal! Hope you keep us updated here and there :)
Bendodo
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@ridethepig HNY - what is your update on this trade?
ridethepig
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as expected... $132 capping the highs...
Dishonx
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@ridethepig how do you feel about it now? The Fed still dominating sentiment on the dollar and without BOJ making any significant moves USD is gaining more ground on JPY.
JoeChampion
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Good insight!
UnknownUnicorn3382580
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Welcome back. Your analysis is always in-depth!
Dishonx
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Great analysis. I started loading shorts at 138.XXX.