10 November 2023 FX | Rates

Trade Ideas Survey: Participants Split on USD/JPY Views, Are 1Y 165 Calls Cheap?

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Responses were collected on 9 November 2023.

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Price action in JPY continues to divide investors. More recently, Finance Minister Shunichi Suzuki stated, ‘We are watching [the foreign exchange market] with a strong sense of urgency’. Despite this and the BoJ loosening its YCC upper band, JPY continues to slowly weaken against the USD and is now trading close to its previous highs above 151.

Our participants’ views have been similarly divided. Participant 7 is adding to their USD/JPY long position with 1 year 165 USD/JPY calls. 1y 25d call 25d call vol has increased in recent weeks, but you must pay to play given the risk of MoF intervention. Disagreeing with Participant 7 is Participant 8, who is now short USD/JPY (along with USD/MXN). Their thesis is that USD should fall from here driven by lower long-end rates.

Meanwhile, Participant 16 exited their USD/JPY short given the BoJ chose to temper its recent adjustments and allow 10Y JGB yields to remain below 1%. Participant 16’s view that we are currently in a trading environment means they are being more tactical. Therefore, they also took profit on short EUR/GBP. We think EUR rises from here, currently targeting 0.8765.

Bilal’s Trades and Views

Here are our existing trades – we recently exited our EM FX longs in MXN in INR. Banxico surprised us by shifting to a more dovish stance, while INR was unable to catch a bid even as oil prices fell.

DM

Long EUR/GBP (target 0.896; stop 0.858) – read here.
Long USD vs European basket – read here.

Rates

Long 10Y Gilt (FX hedged) vs short 10Y OAT (target 100bps; stop 25bps) – read here.
Receive May 2024 SONIA (target 25bps) – read here.
Pay Apr-24 EUR-OIS (target 0bps) – read here.
SONIA and SOFR Mar24/Mar25 calendar box (target 0 bps) – read here.
5s10s UST steepener (target 15bps) – read here.
Pay 1Y1Y US OIS (target 5%) – read here.
Short US10Y vs USD hedged 10Y JGBs (target -450bps) – read here.

Equities

Long homebuilders and regional banks – read here.

EM

Long EUR/CZK (target 25:60; stop: 24:00) – read here.

Commodities

GCK4 $1,850 put option – read here.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)

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Trade Ideas Survey: Participants Split on USD/JPY Views, Are 1Y 165 Calls Cheap?

Macro Hive Network

Bilal’s Trades and Views

DM

EM

Commodities

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Trade Ideas Survey: Participants Split on USD/JPY Views, Are 1Y 165 Calls Cheap?

Macro Hive Network

Bilal’s Trades and Views

DM

EM

Commodities

Enter your email to read this Macro Hive Exclusive

Your comments

Cancel reply

Like these insights? Join our free newsletter for regular updates and trade ideas.

Like these insights? Join our free newsletter for regular updates and trade ideas.

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