While the plight of the Euro is attracting everyone’s attention as of late you might be missing developments in the so called commodity currencies relative to the Yen. We have found in the past that the CADJPY and AUDJPY more often than not lead the behaviour of the CRB Index (the commodity market) and we see little reason to doubt that this time around this relationship will be any different. Note how long the CADJPY moved in a sideways direction, from early June last year in fact. Also note how long the CRB has also been tracking in a sideways direction. And perhaps it goes without mentioning that the US 30yr yield has also gone nowhere since early June 2009. Now, low and behold, the CADJPY is breaking out. We think that digging deep into our pockets to find cash to buy deep out of the money LEAPs calls on DBC and TBT (Jan12 exp) will be “dramatically” rewarding! If you are looking for a “black swan” trade this is it!
CADJPY Spot Rate
CRB Commodity Futures Index
US 30yr Yield
