Cable: Looking to start building long position again
My long-term macro view remains unchanged, namely that we should be buying GBP and the commodity currencies and selling the Yen, EUR and the USD. The market has gone from bearish USD, to primarily bearish EUR and JPY, but I see this as being different to being wholly USD bullish.
The turn in USD/JPY has of course forced a short-term turn in cable, AUD/USD, USD/CAD etc, and quite substantial ones at that. But I’m of the view that these moves are wrong, and will be eventually sharply reversed.
But could USD/JPY explode higher towards 125? Absolutely it could, and if this happens then I’m sure the USD will make more short-term gains against the commodity currencies. So it’s certainly possible that cable sees 1.53 and AUD/USD sees .83. But at some stage I had intended to re-enter the long cable trade and we are at, what I consider to be, comfortable levels. I’m dipping my toes in the water with a small cable long position; let’s see what happens.