Banking Profits – Long Yen Vs Commods

I’m starting off the new year with a bang, banking just over 900 pips total in short trades via AUD/JPY, NZD/JPY as well CAD/JPY.

These pairs have fallen fast ‘n furious with the recent move towards “risk aversion” and there is never a better time to take money off the table than “when there is money on the table”!.

We’ve discussed the correlation of a stronger Yen and weaker Commodity currencies here time and time again – so these pairs ( being a no brainer ) provide the biggest bang for yer buck in “straight up” pitting the weakest against the strongest.

I will be planning to re enter these pairs in coming days, as they “may” take a reasonable bounce before continuing on their way down.

12 Responses

  1. R January 15, 2015 / 5:07 am

    WOW SNB…. goodness….

    • Forex Kong January 15, 2015 / 5:29 am

      Unreal move…and so totally unexpected.

  2. madness January 15, 2015 / 6:48 am

    So does this mean ECB QE definitely coming? Hence massive risk on in markets?

    Don’t think the SNB would have taken off the EUR/CHF 1.20 floor had they not been pre-warned by the ECB as to what they intend to do? Seems like the ECB lining up a major QE operation – this is only thing that would have caused the SNB to abandon the floor as they know they’d never be able to defend against what the ECB intend to do?

    • Forex Kong January 15, 2015 / 7:50 am

      I see oil catching a bid as the larger driving factor in market movement this morning – which would contribute to a weaker US Dollar as seen so far.

      The SNB move will take a little time to digest / consider, but off the top of my head I see it as suggestive that “No QE” will be implemented by The ECB.

      • madness January 15, 2015 / 7:59 am

        Can you give an insight as to why SNB action is, “…suggestive that “No QE” will be implemented by The ECB….” – Everywhere I read, everyone seems to be saying the opposite? Thank you.

        Yes, OIL seems to have rallied 5% yesterday and 5% today (so far)…commodity currencies catching a rela bid – just look at usdcad today

        • Forex Kong January 15, 2015 / 8:10 am

          The ECB cannot act on behalf of the entire E.Union as it’s actually “illegal” so aside from the fact that The EURO has already priced in any news of “further easing” by ECB, why would Draghi look to increase the balance sheet / further hurt The Euro in the direct face of massive global slowing, and global economic slowdown?

          If would be like pissing into the wind.

          You see the storm is coming….You “know” the storm is coming…and you also know that “nothing” you can do will stop it.

          I highly doubt The ECB will do anything “other than” some “token suggestion” of some impy little program, that will essentially amount to nothing.

  3. madness January 15, 2015 / 8:24 am

    Thank you Kong.

    Decision by ECJ this week basically concluded the ECB can engage in QE provided that it met certain conditions. I can well see the ECB skirting around any points of law and somehow managing to circumvent the rules. Remember, here is a man (Draghi) who without doing anything, managed to reduce EU bond yield to record laws simply by saying, “I will do whatever it takes”, and 3 years on, the markets are still believing him, The ultimate poker player.

    I do believe they cannot undertake the sort of QE the US did so perhaps any QE rally may well be short lived.

    At this moment, I believe the ECB is desperate enough to do anything, legal or otherwise. They can simply enact a QE and then let the matter play out in the courts for years.

    Risk markets are simply trying to hold up until next Thursday when the announcement is made. Are you looking to position yourself or be flat in to the announcement?

    • Forex Kong January 15, 2015 / 8:34 am

      I’v got a few “tiny trades” on but for the most part yes will plan to “stay liquid” prior to the date.

      Draghi has done an excellent job “doing nothing” as it’s really just been the media machine – feeding the masses what they want to hear.

      The European situation cannot “come close” to being repaired without programs on an absolutely “massive scale” and Draghi is actually “smarter than that”. They can’t crush the currency, and in all…..don’t “want to”.

      Also consider that “eventually” when U.S is forced to raise interest rates ( late 2015 maybe?? ) this will in turn elevate the U.S Dollar, and put continued pressure on EUR so…..effectively EUR will still remain somewhat “supressed” via simple market mechanics – No QE needed.

  4. madness January 15, 2015 / 8:50 am

    Thank you Kong – much appreciate your time to respond back.

  5. R January 17, 2015 / 9:20 am

    The antics of the central banks are getting beyond ridiculous.. So we are to expect the ECB to introduce some sort of QE next week.. The swiss have just destroyed their own economy for a couple of years..
    What is to stop the US from doing something stupid to what the SNB have done and perhaps put a cap on USD/JPY at 100? Effectively killing off the rest of the world…

  6. R January 19, 2015 / 1:08 am

    And today we have the China market crashing…

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