SocGen's Kit Jukes out with his latest on the Fed trade. Has he got it right?
Kit Jukes of SocGen has said in his latest note that the yen is the only currency to have rallied against the dollar following a Fed hike
"Four rate hiking cycles have started in the last 25 years and the yen is the only currency to have rallied against the dollar in the six months after they acted on each occasion.The dollar has risen against no currency in each of those cycles though, if we exclude 2004, the big EM currencies (ex-China) have all suffered."
He also warns against shorting the yen on any BOJ action
"Shorting the yen seems foolhardy even if the BOJ is preparing another round of QQE to offset any Fed move."
He's not alone in thinking that the dollar is unlikely to gain after the first hike. We're now at the stage where the market has accepted that hikes are coming. We're just arguing over the small print now of when.
I'm expecting a knee jerk jump in the dollar when they do raise and that may last a couple of sessions before the world and his mate decide to take profit.
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