Over the past two days, I suggested the USDJPY was breaking out in anticipation of weakness from another algo driver — CL.
We’ve seen VIX do a pretty good job of preventing big sell-offs. If a rate rise seems imminent, we should see the dollar strengthen and, potentially, a breakout in USDJPY — which would help…. Rest assured, when CL finally does start plummeting, USDJPY will be spiking higher to try and compensate. The yen carry trade has been dormant, but is far from dead.
Indeed, the USDJPY has broken out of the falling channel it’s been in since last November (even as Japan’s Abe — accused of being a currency manipulator — pals around with his accuser over the next few days.) But, CL has continued to rally, too — in the face of huge inventory builds as reported by both the API and EIA. And, of course, VIX is also setting records (for the level of intraday absurdity and manipulation – more on that later.)
Is this the breakout we’ve been waiting for, or is it the calm before the storm?
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