Long USD: Going long USD and short EUR/CHF with a two-week time horizon

Time to make the donuts

As I have been discussing, I think the asymmetry into CPI and into corporate month end is higher USD. I will put on four trades today.

Long USD/JPY at 151.80 with a stop loss at 149.84. Take profit 154.84.

Risking 196 to make 314.

Hope to hold through corporate month end, no BOJ hike, and gamma squeeze towards 155.00.

Short AUD/USD at 0.6486 with a stop at 0.6576. Take profit 0.6357.

Risking 90 to make 129.

I am choosing AUD instead of CAD because I am not sure about Bank of Canada. The data has been good enough, but easy to look through. It would make sense for them to cut again given the housing situation, but the blip in jobs and CPI could make them hesitate.

Short EUR/USD at 1.1585 with a stop at 1.1711. Target 1.1409.

Risking 126 to make 176.

Entry point is not great, but I still think it goes down from here.

Short EUR/CHF at 0.9228 with a stop at 0.9285. Target 0.9111.

Risking 57 to make 117.

Again, I normally like selling high, not low, but my instincts tell me EURCHF is gearing up for a crack of the famous 0.9205/20 level. If it’s going to happen, month end would be the time.

My logic is that with two cuts fully priced for the Fed, the asymmetry on CPI is to the strong side and the flow asymmetry from here until month end is buying USD. I expect that, similar to last month, there will not be enough supply of USD to meet the demand. I also don’t think the BOJ will hike, so that’s another small kicker for the JPY trade.

Keeping it short today. You could also do these plays via 2-week options, but when I priced them all up, none of them looked particularly cheap. Realized has been low, but you could expect that it might pick up given we are finally about to get a bunch of events.

Silver

My guess is that silver and gold margins are increased after 3 p.m. today. If they are not, I will probably square up shorts and move on. $46 is the first TP zone for shorts.