Ұ$ the Deluxe Trade Edition
Yesterday, I detailed the inter-market dynamics that would work in lockstep for the thesis below:
The first inter market relationship was in relation to the carry trade and the price of crude oil.
The dollar going into the holiday in the United States is a good carry trade, undeterred by light economic news and data from both the US and Japan.
Crude is bouncing back from the ‘end of petrodollar narrative,’ adding pressure on the yen.
You can see that oil really is bouncing back below:
While the market was lukewarm. Even with the leadership of NVDA 0.00%↑ , the QQQ 0.00%↑ looked weaker.
In the small sample size of the two instances in history when Wall Street was closed for Juneteenth, we can observe the following:
• On Friday, June 16, 2023, SPY 0.18%↑ decreased by approximately 1%, while the Dollar rose by 0.3%. Due to the market closure on Monday, both the index and the Dollar saw further gains post-June 20.
• On Friday, June 17, 2022, SPY 0.18%↑ experienced a minor gain relative to its open and close. The Dollar increased by approximately +0.7%, and both continued to rise post-June 21.
Which leads to the trade idea:
As soon as the market closed yesterday and throughout today, we saw a strong USD/JPY. It will continue to be a safe harbor until later this week. Below is an hourly chart showing how the USD/JPY has stayed above its low at 18:00 EST yesterday.
Best,