USA at 250: the Black American struggle for life, liberty and the pursuit of happiness 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
South Korea Signals Possible Interest Rate Hike as Inflation Remains Elevated 
State of emergency in Crimea as Ukraine focuses pressure on ‘jewel in Putin’s crown’ 
China Keeps Loan Prime Rates Unchanged for 13th Straight Month as Policymakers Prioritize Credit Demand Recovery 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
Supreme Court Backs Lisa Cook, Defends Federal Reserve Independence Against Trump Firing Attempt 
Geopolitical Shocks That Could Reshape Financial Markets in 2025 
ECB Keeps July Rate Options Open Amid Iran War Energy Price Risks 
Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
AI can be a personal trainer in your pocket – but is it safe? 
The yen has erupted higher more recently than that (up 16% vs USD and 25% against GBP in 1H 2016 for example). That’s a reminder that when a currency is as cheap as the yen (USDJPY PPP is at 103 according to the OECD) it can spike pretty sharply. It is kept at current undervalued levels by the commitment of the BOJ to target a 2% inflation rate and anchor bond yields.
We see only a small chance of that commitment waning in 2018 because the inflation rate won’t get anywhere near 2%, but the net result is a huge skew in the range of outcomes for the USDJPY
The election of Shinzo Abe as Prime Minister of Japan brought the BoJ into the fray
Why shorting USDJPY 1y skew: In selling downside strikes, buying USDJPY puts is paying for the negative skew of low strikes. As we don’t see USDJPY collapsing below 100, we do not need to buy the full downside. So, we also finance our puts by selling the downside skew via put spreads.
In setting a topside knock-in: Near-term, USDJPY should be initially mildly supported by mounting US yields. This suggests conditioning medium-term put spreads by a topside knock-in.
Such a barrier will cheapen the vanilla trade, as the bearish skew discounts the market-implied probability of bullish moves.
