I posted earlier from Morgan Stanley on USD/JPY here:
More now (this from a different Ms strategist), in summary.
USD/CAD sideways for a couple of months then lower:
- USDCAD is an expression of the USD view and less about the CAD side.
- Assuming that the broad USD index starts falling from now, 2-3-month at-the-money USDCAD puts … become a cheap way to play for the weaker broad USD, with positive P&L if USDCAD is below 1.3150 and 1.3110 in two and three months, respectively.
Buy long-dated USDJPY puts
- Wider credit spreads are often an early indication that higher volatility is to come … expect more.
- We are surprised that this hasn't had more spillover into the FX markets
- We recommended a 1 year 40 delta USDJPY put in our year ahead outlook, which currently has a strike around 107
