AUDJPY tactical
[04/12/25] [T]
While I continue to mull over the short USD exposure (it’s already popular with Hassett essentially confirmed, so managing FOMO is the main issue here), I think AUDJPY is setting up nicely for a short into the top of this seven month trend channel with a tight stop. People are getting lured into longs just as the macro stories and positioning are diverging, in my view. On the AUD side - GDP disappointed yesterday (inventory detraction especially), Bullock rescued the post-data clear-out with the ‘CPI pressures’ comment and we are just five days from the RBA meeting, forming a risk hurdle for fresh longs to get over… meanwhile the PBOC signal slowing appreciation with a marginally higher USDCNH fix. It is fair to say that tonight’s AU goods surplus data is impressive, but that should now be a known known (especially the gold exports uptick). The household spending beat should play second fiddle to yesterday’s GDP miss. All said, being long AUDUSD is no longer the obvious USD short it seemed two sessions ago, but still has merit and is pushing to fresh highs with the complex… but I think the easy money has been made and it’s tougher from here on a cross basis; plus my near-term view on precious metals is clear and correlated. On the JPY side of the equation I am sensing Dec 2024 repetition complacency. The assumption is that @80% priced, a BoJ hike would see USDJPY losses quickly faded and only a runaway topside USDJPY in the wake of the meeting would bring the MOF in to turn the trend. A fair comparison, but because of this template, I don’t think the JPY long exists and I do think they hike and momentum sustains as positions are cut slowly. In fact, given carry strategies retain their US government shutdown momentum, I would suggest the market is shorter JPY than we believe - not to mention the Ishiba/Takaichi/loose fiscal discount in the ccy. This early-days asymmetry that I am sensing can be traded now that the 102.50/55 zone that has capped previously and then 7x yesterday across 3 timezones (I’ve shown it in red on the second chart below) has impulsively broken in Asia. I like selling here at 102.80 this morning with a tight stop above 103.10. Beneath 102.45 and stop trails to entry/we let it run.
Trade expression of choice:
Short AUDJPY 102.80. Tight S/L 103.10.
Update [04/12/25]
TP on 50% of the short here (102.30). SL remains at 102.80 for the balance. Below 102 and I will trail that stop to the 102.55 pivot.
Update [05/12/25]
Closing the position on the London open (102.32). AUDUSD is breaking the pivot into 0.6625/30 and USDJPY is failing to follow-through on the 154.50/60 break of Monday’s spike low.
