JPY crosses still looking very vulnerable

There would seem to be no reason to buy the JPY crosses other than taking profit on existing short positions. Oil prices continue to slide and global equity markets are shaky; 2 strong reasons to be buying JPY.

The market is overall still small short JPY but this is made up of some large JPY shorts out of Japan and increasing longs from the big speculative players. So net positioning isn’t quite telling us the whole story.

I prefer to sell rallies in USD/JPY but the fact that we couldn’t get one yesterday during Asia when conditions were reasonably positive, suggests that there is more immediate downside ahead.

Elsewhere, we had the spike above 1.40 in USD/CAD and I’m looking for intraday rallies to sell into. The other trade I like is EUR/GBP, with longs near .7300 offering decent risk-reward prospects.

Good luck today.

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