It’s time to go long USDYEN courtesy of the anti goldman trade! UPDATE – KERMIT SLAYED, AGAIN!

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A rather “smiley” Mr Stolper – I guess he hates green frogs?! 

UPDATE – 12 OCT 13 – I hope SBM readers took our suggestion to trade AGAINST the muppet slayer! As of last night, dollaryen was closing in on the “world’s worst currency trader” Mr Stolper’s stop loss (actually I’ve just realised how apt his surname is!!). SBM 3 – Goldman O. 

SBM Tip – whenever these  so called “God’s work do-ers” put out a recommendation to the public – do the opposite. In fact, we are seriously considering creating a strategy to do precisely this and trade it!!  

AAAAAGH! The Squid got me again!! 

See belows latest trading “advice” from our friends at “The Vampire Squid” – translation – get yourself long and target 98.80 in the days ahead. Mr Stolper has the worst record bar none when it comes to currency trading which rather begs the question why they employ him. Could it be something to do with them being on the otherside of that trade? Mmm… We intend to trade against him that’s for sure!! 

“Go tactically short $/JPY on less proactive stimulus in Japan and narrowing rate differentials 

While we believe that $/JPY will ultimately move higher on growing interest rate differentials and more stimulative policies in Japan, the near-term risks have increased, as we discussed in our latest FX Views published yesterday. On a tactical basis, these risks could push $/JPY temporarily lower first. 

This week the Japanese government decided to go ahead with the sales tax increase at the beginning of the next fiscal year. The additional fiscal package pre-announced at the same time aims at alleviating only part of the negative impact from the VAT hike, according to our Japan Economics team. The BoJ meeting this week is unlikely to lead to any further stimulus either. Our Japan economists expect the next BoJ easing to roughly coincide with the implementation of the sales tax increase in April next year. With short positioning in JPY still very stretched, these policy announcements remove some catalysts to hold on to JPY-bearish positions. 

On the rate differentials side, at the last FOMC press conference, Chairman Bernanke made explicit reference to fiscal tensions as a factor for delaying the widely expected tapering announcement and for the strengthening of the forward guidance. Rates have rallied since and continue to be under downside pressure. Uncertainty about the fiscal outlook in the US will likely maintain this downside pressure for now. 

The combination of less favourable rate differentials, less proactive stimulus policies in Japan (at least for now) and continued short JPY positioning suggests the near-term risks to $/JPY have become more skewed towards the downside. We recommend going short $/JPY at current levels of about 97.30 for a tactical target of 94.00, with a stop on a close above 98.80.”

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