Snippet from Soc Gen on the yen, looking at the US election and then the CPI data due on Thursday:
- In the US, tomorrow’s mid-term elections could gridlock the US Government
- Thursday’s CPI data should be well-behaved at the core level, which probably peaked in September
And that:
- Maybe there’s enough there to limit how much further US yields rise, even against a backdrop of continued solid employment data. If US yields are close to their highs, then USDJPY probably is too
Further on the yen:
- The BOJ has intervened aggressively (and expensively) on the MOF’s behalf, and it’s easy enough to imagine that if USDJPY shows clear signs of having peaked, the Yen has plenty of room to rally before shorts are all squeezed out or before it could reasonable be called an ‘expensive’ currency.”
The best trade though is maybe GPB/JPY:
- Shorting the Dollar against the Yen looks like a better trade than going long EURUSD. But maybe short GBPJPY is an even more appealing trade.
