Closing out long-term short usd/jpy position
Usd/jpy is breaking through the 200 daily moving average today as part of a decisive move to price in further stagflation across the global macro landscape. This is after Powell’s Senate testimony where he said that the Fed is open to speeding up the pace of hikes again.
The initial entry at 141.23 on Nov 22 was well timed, but unfortunately I overstayed my welcome in the trade. It’s also hard to stay in a short usd/jpy position when on a shorter term time frame I am bullish USD and global bond yields. The Bank of Japan will not steer policy in a hawkish direction in a time frame fast enough for JPY to catch up with rising Fed hiking expectations.
There are other ways to speculate on the BoJ becoming more hawkish in its policy. One is to be short another currency against JPY, like AUD/JPY. Short JGB futures and long Japanese mega banks are other ways to get exposure. All three come with their own set of tradeoffs. If I decide to put these trades on for the Fidenza Macro portfolio, I’ll write a post about it.
Current portfolio:
The average SOFR rate over the life of the trade was 4.17, so the approximate carry I paid from being short was roughly 87 bp. This will be subtracted from the overall gain/loss in the table below.
Disclaimer:
The content of this blog is provided for informational and educational purposes only and should not be construed as professional financial advice, investment recommendations, or a solicitation to buy or sell any securities or instruments.
The author of this blog is not a registered investment advisor, financial planner, or tax professional. The information presented on this blog is based on personal research and experience, and should not be considered as personalized investment advice. Any investment or trading decisions you make based on the content of this blog are at your own risk.
Past performance is not indicative of future results. All investments carry the risk of loss, and there is no guarantee that any trade or strategy discussed in this blog will be profitable or suitable for your specific situation. The author of this blog disclaims any and all liability relating to any actions taken or not taken based on the content of this blog. The author of this blog is not responsible for any losses, damages, or liabilities that may arise from the use or misuse of the information provided.