Two New Trades


BUSY DAY - Wednesday was a busy day! Two new trades on the books, both of which I have been quite excited about. I have been talking for some time about wanting to sell USDJPY and buy GOLD and on Wednesday, both trades set up. Now, it's important to understand straight away that it's always difficult to pinpoint when a market will reverse course and there could be some initial pain before we see the desired results. But in both cases, I love the trades and believe there is plenty of upside. As far as USDJPY goes, I think the catalyst for an overdue correction in the Yen's favor will come from the next downturn in stocks. A risk off move should be enough to inspire profit taking in a very overbought market. 

MAGIC - With respect to GOLD, I have a very hard time seeing the metal trade much lower in the current environment. The US Dollar run has certainly weighed on GOLD but the Dollar run is now looking super stretched. Don't forget that a lot of why the market has been buying the US Dollar (Fed rate hike) has already been priced in, and don't forget the Fed is like a magician when it comes to its forward guidance, ie it can make it disappear real quick. I also believe inflation is going to turn up going forward and clearly this is something the Trump administration could have a hand in accelerating. And as things correlate, this would imply higher GOLD prices. Finally, with monetary policy exhausted and stocks extended, is GOLD really such a bad place to be? Happy Turkey Day!

Let's not forget a lot of the reasons the USD is strong have already been priced. Via @joelkruger


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