USD/JPY: Happy to stay short for now

I’m expecting a volatile day in USD/JPY ahead of the final weekend polls for the US election. From what I can gather, hedge funds are generally speaking still long of USD/JPY, especially the shorter-term players, and I suspect that they will start bailing out if we get below 102.50. There is still plenty of dip-buying demand from Japanese asset managers especially in the crosses like AUD/JPY and NZD/JPY but if the leveraged masses start buying JPY, these corporate bids won’t hold it for long.

I’ve got a medium-term short with a partial profit target at 100.40. If we look like closing tonight above 103.50 then I will reduce my position over the weekend.

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