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HCby u/hidayat_carlo·4hDiscussion

JPY reaction to BoJ - thinking about the carry trade unwind

Watching $JPY this morning and seeing it jump around after the BoJ meeting. We're currently seeing it up over 1% on the day, trading around 37.2677. The range has been pretty wide, 37.04 to 37.63, which shows some serious indecision but definitely a strong bounce off the lows. It felt like the market was pricing in a much more dovish stance, and even though they didn't hike, the forward guidance or lack thereof seems to be giving some the impression that a hike is closer than previously thought.

I'm thinking about the implications for the carry trade unwind. If the market starts seriously pricing in a BoJ hike in the next quarter or two, that could have a significant impact on some of the higher-yielding pairs. I'm keeping a close eye on $AUDJPY and $NZDJPY. It's not a clear signal to go short yet, but the risk profile for those long carry positions has definitely shifted for me. Curious to hear how others are interpreting the move and what pairs you're watching for potential follow-through.

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1 Comments

WKu/wkim·4h

The 'indecision' you're seeing could also just be typical post-BoJ volatility. They didn't hike, so the market's initial reaction often overshoots. Curious to see how it settles after the noise.

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