Yen Crosses

[SAINT]

Technicals:

The Yen crosses; namely the AUD/JPY, CAD/JPY and GBP/JPY are threatening a dark cloud or bearish engulfing pattern on the weekly.

Fundamentals:

A post I made in the commodites/metals forum is related to China, potentially
using creative accounting to exaggerate their stimulus. Also, as in the Aluminum
market, prices are soaring despite falling demand. This would add downside risk to
AUD or CAD.

The risks to GBP etc are the 'green shoots', which may be running out of steam.

CAD/JPY would offer the better rate differential at -0.15%, followed by GBP at -0.4%
on the shorts.

 

[SAINT]

The 3 crosses mentioned yesterday, moved in favour overnight, giving further potential to the technical setup.

 

[fxmonk]

Saint, I saw the same thing. Out of the three that you mentioned I especially have my eye on CAD. I've been watching USDCAD and oil for a long time and have been waiting for sentiment to change on it and it's finally weakening. Mainly the USDCAD's move looked overdone compared to the oil rally, BOC is worried about a strong CAD during these times, especially when the "green shoots" euphoria is over like you say. I wrote an article about this on my blog, if you're interested: USD/CAD imbalance

The 3 crosses mentioned yesterday, moved in favour overnight, giving further potential to the technical setup.

 

[SAINT]

Update: CAD went 500 pips before a turn so far, while AUD has ranged.

The clear winner was GBP/JPY which fell 1700 pips lol!!

The carry trade has supported AUD and oil/fundamentals CAD. I expected a reversal in
risk assets, but this hasn't gone far yet.

 

[SAINT]

The 'mother of all carry trades' is beginning to unwind. Bloomberg a bit deluded in calling it a flight to the Yen as a 'safe haven'. 170 debt to gdp? Nice one Bloomberg.