And not a moment too soon by the looks of things
Morgan Stanley are out with their weekly (award winning) FX review and they've also bailed on their USDJPY long from 112.50. They were looking for 120.00 but got out at 113.12 on Tuesday.
"We closed this position earlier in the week as we felt the Eurozone political risks were increasing the potential for Japanese investors to sell their EUR-denominated assets. In particular, the Japanese own around 13% of the French OAT market, indicating there were further downside risks for EURJPY. We will still look for renewed opportunities to buy USDJPY later in the year."
Skipping over the trade for a moment, that's some useful info in why we've been seeing the yen pairs leading the way in French election trading. Another piece of the puzzle falls into place.
Back to the trade itself, they're not giving up on it but see that there's risks in the way. Their stop was only 150 pips below entry and with the failure to break 115.00, that looks a decent get out.
They've also gone to market on their EURGBP short order from last week. They wanted in at 0.8650 but they took the plunge at last night's US close, which in my book, puts them in at 0.8481. their TP and SL remain the same at 0.8000 and 0.8800 respectively.
Other trades they are in are;
EURUSD short at 1.0650 TP 0.9900 SL 1.0850
AUDSUSD short at 0.7540 TP 0.6900 SL 0.7800
Overall they maintain a bullish USD bias and they have also updated their FX forecasts,
"We have adjusted our currency projections, suggesting the scenario that
we call the 'good USD' staying in place for longer. The 'good USD' shows strength
against low yielding currencies while high yielding currencies remain supported. Indeed,
we see little reason to change our bearish calls on the EUR and the JPY, but see the
EUR offering more downside risks, which we address with an asymmetric bull - bear
projection. We have made some adjustments to our currency forecasts, to bring them
more in line with the bullish EM views that we have been promoting recently -
particularly on the high yield side of the asset class. We continue to hold our longstanding
strategy of preferring high yield vs low yield in EM."
Finally, as much as we like to dig into their trade calls, as I've said before, their FX Pulse report is a fantastic bit of analysis so I congratulate them on ranking first in the European Institutional Investor Survey. In light of Adam's post earlier, I wasn't paid to say that BTW ;-)
