Fx Thoughts : Taking a Stand For The FOMC

You know when you get Citi and JP Morgan in your mail box on Monday morning saying the trade of the week is to Buy USDJPY, it is probably time to sell.

They will be right next week probably but this week is the random walk week as we head into the FOMC amidst the backdrop of falling oil prices, historic lows in the Ruble, 16 year lows for the Indonesian rupiah and the rest.

It does not make much sense, does it ?

Cheap oil is good ? Indonesia is showing up green !


And America looks good too !

oil effectsSource : WSJ

Now they say falling prices is bad for companies and rentals and so forth.

Thus it does not matter if oil rises or falls, does it ?

In 1 month, we have seen fx vols shoot up through 5-75% for all the currency pairs against the USD.

And no one can really tell where the USD is going at the moment, going up one day and down another.


The time has come to take a stand even as I am smarting from my USDJPY stop loss at 120 and my 116 level has arrived. https://tradehaven.net/market/fx/forex-thoughts-the-deflationary-mindset/

The future depends on the FOMC on Thurs morning at 3 am but it does not look like USD story will go away anything soon, woe betide if the FOMC verves to a dovish stance which would spell doom for the rest of the world looking to America for leadership.

Everything that is happening now is the result of market’s extreme positionings and following the herd and now the herd is disbanding, taking profits to cover the pain as we note that currencies that have been shorted are recovering their ground, such as the SGD which is holding up remarkably well for the past week.

Rather than waste this opportunity to fear of what the markets have in store, perhaps it is time to look at some option trades for all the good that lower oil prices will bring in the months ahead. Companies can go bankrupt for this but surely currencies will not ?

Selling USD puts and SGD calls, anyone ?





If you can keep your head when all about you   
  Are losing theirs and blaming it on you,  
If you can trust yourself when all men doubt you,
   But make allowance for their doubting too;


Yours is the Earth and everything that’s in it,   
    And—which is more—you’ll be a Man, my son!” ~ Rudyard Kipling