The Yen-evitable Reversal

Trade structures for what happens next for JPY.

After printing lows of 155.23 on Monday, the latest round of US/Japan intervention in the currency markets has finished. Although well executed in taking advantage of the AI spook in equity markets late last week and US data, the tree shake was inevitable.

We took profit on our long BRL/JPY trade on the 23rd July in advance of any action, tying it in with our latest thoughts on the Yen here.

In the trade note we concluded, “we don’t see such a move as being constructive for the Yen in the medium term, and would look to add fresh shorts on any interim dip.”

As a result, we now look to tactically fade the intervention-led move in Yen crosses, with the belief that (yet again) the fundamental picture for the currency hasn’t shifted.