- New USDJPY short in play
- Profit booked on USDCAD long
- Waiting on Kiwi short
- Looking to buy some GOLD
THE TRADE - I sold some USDJPY on Monday but am not sure whether I will be in the trade by the time you get this update. The set up was super sweet with the major pair racing higher early in the day. The market was hyper extended and with USDJPY confined to a broader downtrend, the trade was that much more compelling. Fundamentally, while the US Dollar has been finding its step again on more hawkish Fed speak, it's important to remember the implication of higher US rates is risk negative and risk negative is still USDJPY bearish.
PROFIT - But it's also important to remember this trade was not a longer term trade for me. It's very possible there is plenty of downside risk here and I actually think there could be, but I didn't get into this for anything more than a nice little pullback. If the trades gets going, I will book some profit and move the stop on the rest of the position to cost. Moving on, I booked a nice profit on my USDCAD long and decided to step aside now that the US Dollar rally is more of a broad based move specific to the US Dollar.
STRATEGY ADJUSTMENT - The point here is that if the Dollar keeps rolling on this theme it will roll across the board and my short NZDUSD position will benefit. So in a way, now that the currency movements have been less about the specific fundamentals of Canada and New Zealand and are more about the Fed, interest rates and the US Dollar, it makes sense to reduce exposure to the US Dollar, take a good amount off the table, but still have that exposure via short Kiwi.
YELLOW METAL - Moving on, I'd really like to buy GOLD this week. I absolutely love the long GOLD play and believe it can perform well even if the US Dollar strengthens. Simply put, Dollar buying will come from safe haven demand and the yellow metal is also an attractive play in the current environment of flight to safety. Hedging against record low interest rates and the prospect of rising inflation isn't the worst idea in the world and I believe GOLD is in the early stages of a major bull run. If I can buy on an extended dip intraday around $1300 I will.