Emerging Trading Opportunities

  • Looking to sell USDJPY
  • Central bankers exhausted
  • Looking to buy GOLD
  • Risk markets still vulnerable
  • Looking to buy USDCAD

FLIP IT AND REVERSE IT - So last week I was looking to buy USDJPY and sell GOLD and this week I'm looking to sell USDJPY and buy GOLD. The truth is, selling USDJPY and buying GOLD looks to be the better play on a medium-term basis. There really isn't any opportunity just yet, but I think a USDJPY move into the 116.00 area and a GOLD drop into the $1170 area would justify action. We've seen a bit of a recovery in risk sentiment over the past few sessions and this has been supportive of USDJPY, while weighing on GOLD. But I don't expect this to hold up and we should soon see another downturn in risk. Remember, trade has been thinner of late, with the US market out for holiday on Monday. So while it all may feel good into Tuesday, I'm not too sure it lasts. Ultimately, central bank policies are exhausted and there just isn't much left in the tank to stimulate.

A NEW FOCUS - I am going to say right now that when things turn down again and it becomes even clearer that central bank easing gestures aren't doing the trick, the next big focus and pressure will be for fiscal policy reform. Central bankers will basically throw their hands up and look over to government for a solution. Central bankers will start talking about how their hands are tied and there are only so many tools in their baskets to help the economy. And so, the focus will shift to government and new forms of stimulus. But right now, central bankers are still trying to make it happen, though I believe we have reached the end of the line. As far as other trades go, AUDNZD (long 1.0639) has rocketed higher today and that's a great thing for our book. The trade is still in its infancy but this has been a nice little jump. Otherwise, I have my eye on USDCAD and will be looking to buy on a dip into some major trend-line support around 1.3550-1.3600. See today's video for insight.

Don't expect this risk rally to hold up much longer. Via @joelkruger

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