Hedge funds getting stuck into USD/JPY

Bit of action in the JGB world with the spread between 10 and 20-year bonds at a 13 year high. This is on the back of worries that the Japanese parliament will struggle to pass budget-funding laws.

Heavy offers above 80.00 have been soaked up be more relentless waves of buying from big macro funds but I’ll stick to my earlier call, that selling rallies once everyone is really really long, is the best strategy here.

  1. Poor hedge funds, getting sucked into another most likely head fake (o Shirakawa show me your big nasty quadrilions of QE! :-))

  2. Sean, the interesting thing is the way USDJPY moves. Once it breaks 200Day MA @79.43 level, it never bothered to look back. Retracement is tight and well contained at 79.7. It’s like a heavy truck runs in first gear, slow yet powerful. It smashes everything in its way.
    Guess I’m so used to up and downs in Euro and Aussie. I’m a bit of suprised USDJPY moving like this. I think this one might have some legs.

  3. I’m planning to setup a long position if I see a clear break of trend line resistance nearby w/ stop loss below 79.
    Are you still in favor of selling rally? I’ll think it over if you advise strongly against it. 🙂
    btw are the rumored 80.25 and 80.5 barriers true?

  4. Hey Sam, I think buying dips is a fair strategy in USD/JPY and I think there will be sharp dip pretty soon once bulls get overly filled up. So certainly prefer buying dips to chasing this move higher, which I think is a mistake.

  5. Thanks Sean. I waited for the pullback below 79.5 but it never came. I don’t see much in the way until 83-85 level once it clears the trendline resistance. You certainly have a point regarding the heavy long positions. But if you take a look at early Febuary to March run, you will see why I think this one is tradable.

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