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2 Apr 2015
Derivatives strategy to trade USD/JPY range-play – SG
FXStreet (Barcelona) - Forex & Derivatives Strategist at Societe Generale, Olivier Korber, recommends a derivatives strategy to leverage from the ongoing range trap of USD/JPY.
Key Quotes
“Year-to-date, the yen has been bravely resisting the powerful dollar wave and the USD/JPY should stay confined within its range ahead of the summer.”
“The limited scope for lower US short rates (discounting a more dovish Fed path than the lowered dots) provides a floor, while the standstill BoJ (higher exports and wages are helping it to buy time) should cap near-term gains.”
“The yen options market does not seem to expect a break of the spot range, but already anticipates more turbulence within its bounds. The already high USD/JPY-implied volatility compared to slower price action is unlikely to increase."
“We recommend buying a Double-No-Touch to extract leverage from the ongoing range.”
“Buy USD/JPY 3M Double-No-Touch, barriers at 115.50 and 122.50. Indicative offer: 15.5%”
Key Quotes
“Year-to-date, the yen has been bravely resisting the powerful dollar wave and the USD/JPY should stay confined within its range ahead of the summer.”
“The limited scope for lower US short rates (discounting a more dovish Fed path than the lowered dots) provides a floor, while the standstill BoJ (higher exports and wages are helping it to buy time) should cap near-term gains.”
“The yen options market does not seem to expect a break of the spot range, but already anticipates more turbulence within its bounds. The already high USD/JPY-implied volatility compared to slower price action is unlikely to increase."
“We recommend buying a Double-No-Touch to extract leverage from the ongoing range.”
“Buy USD/JPY 3M Double-No-Touch, barriers at 115.50 and 122.50. Indicative offer: 15.5%”