Some thoughts Pre G8 - "Roll up for the mystery tour"

Once again we approach a weekend of uncertainty. Once again everyone has a theory on what they see happening. Once again a lot of these theories are people talking their books.

I am largely square going into this, so I don't have a book to talk really, and am therefore happy to share a little of what occurs to me as I end the day. Thoughts in no special order.

1) Talk I've heard today has been of action / words being more likely to be on commodities than on currencies.

2) Risk I feel is fairly finely balanced, but if I had to err on one side or the other I would err on the side of the message being less supportive of the dollar than people are thinking.

3) If there is something substantive on commodities, I feel oil has to be lower.

4) Short usd/jpy here makes some sense. More likely through options than cash to me (as I think provided you don't just do Monday expiry and get killed on the decay, the possibility exists to job your gamma nicely). But I am wary of oil blowing my position out of the water.

5) Having closed the gap after the BoC, USD/CAD long is starting to make sense. Plus if you look at Cad on crosses, there are still more gaps to be closed (and thus usdcad my find a natural bid for the next few days on stop action alone.

6) Although I often don't like stringing too many thoughts together and trying to make one single trade out of them, if I had to do so, this would probably lead me to be short CAD/JPY. And it does have the advantage of stripping some of the USD exposure out of it. And as we stand it's trading around 105.00, so if a tight stop were required I would have thought somewhere north of 105.70 would work. Sell some somewhere between here and 105.30, maybe add to it on a break of 104.70, and look for a move back to 103.80 if all goes well.

But I am aware that it's not a pair I trade often so gawd knows why I'm looking at it over G8 Maybe I should just stick to short usdjpy via downside puts.

Either way good luck all.

GJ

edit: Monday afternoon, 15:35, not much follow through this morning, and now Crude is on the march northwards, which pretty much runs counter to my central case for the trade. If it pops it's head North of 105.80 will be stopping out straight away. Would have done so already but waiting to see if the 4pm fix offers me a chance to get out at better levels. Short from 105.15 and either way will be looking to exit as the reasons for having this on are no longer valid (at least for the time being).

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