Flows and Orders

Yen shorts at 6 month highs- CFTC

Just reading the Dow Jones headlines of the latest CFTC data and they show Yen shorts at their highest levels since April this year. EUR shorts increased by 10% up to Tuesday of last week, but much of this was probably unwound in last week’s late rally. USD longs increased 3-fold, albeit from quite a low base.

  1. morning sean.
    I have actually come to pick your brain on your view on this current yen weakness trade.
    I understand that you too are a yen bear (please correct me if im wrong) but i would like to present a case for an unraveling of this move come december 16th.
    just a peek into abe’s previous tenure suggests that he is not as radical as he is portraying himself to be. The BOJ has sounded its strong opposition to his exageratted claims
    http://ajw.asahi.com/article/behind_news/politics/AJ201211210032
    and as is the wont of all politicians, this hyperbole fueled ramp might get squeezed on the slightest note of dissapointment.
    I also believe that there are major risks that could unfold such as the fiscal cliff and the looming threat of war which could trigger another bout of risk aversion.What guarentee that the yen wont slip back into its old role as a safe haven, it still is the larger function of the currency and it would take a lot more than empty rhetoric to shake fundamentals (it will remain rhetoric until absolute action is taken and that i think is still quite far away.
    Ofcourse i may be wrong and the usd/jpy might be in the nascent stage of a multi year trend but i would love to know your opinion on this scenario.
    As a trader i will still look to buy any dips but as an analyst i will be extremely wary and have tight stops and look to quickly get in early on the reverse.
    thank you in advance sean.your time and effort is as always much appreciated.

  2. Nice argument Rahul, well presented. I’m short-term Yen bearish and I think this move could continue until just before the election and then I’d look to book profits, for all the excellent reasons you present. I don’t have any longer-term view than that, but EUR/JPY could be at 112 and USD/JPY at 84 by then??

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