Yen Readies for May

Yen is the strongest currency month-to-date as well as year-to-date. Premium subscribers will see the title of this week's theme trades to be “On yen Consolidation”, with trades on USDJPY and CADJPY issued on Wednesday and Thursday respectively.  Our bias over the last 2 months favoured USDJPY, hence the 260-pips over the last two longs. But have things changed now? Is the change in our bias a reflection of change in trend or is it corrective? Fundamentally, the latest yen flows can be conveniently attributed to the heightened tensions between Russia and the Ukraine as well as the warnings from US State Sec Kerry. On the yields front, bearishness has deepened, with 5 straight daily losses in the US 10-year note, calling into focus the 2.60% support. Could these yen gains accelerate as stocks approach the dangerous May equities seasonality?