BARX: Trade for the week ahead: FXWW

From the FXWW Chatroom: Long GBP and USD versus JPY
We recommend a basket of long GBP and USD vs. short JPY (basket ref: 100, target: 103,
stop-loss: 98.5, USDJPY spot ref: 114.0, GBPJPY spot ref: 149.23). Carney’s potential
indication of this week’s hike being the first of gradual normalization cycle could lead to
higher GBP and Trump’s selection of Taylor for the Fed leadership candidate, whether chair
or vice chair, could tilt the Fed’s reaction function to the hawkish side, underpinning the
USD rebound. On the other hand, the BoJ is expected to keep its monetary policy
unchanged and revise down its inflation forecast. Hence, widening monetary policy
differential could lead to appreciation of GBP and USD versus JPY.
This trade recommendation is valid from the Wellington open Monday morning to the
New York close Friday.

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