Goldman is out with a call telling clients to short the dollar against the yen.
As you can see from this chart, the dollar has surged against the yen over the last couple of months.
So why is Goldman calling for the end of this?
- Japan’s trade data is improving again. It’s already returning to net surpluses.
- There’s no evidence that the BoJ is going to keep easing, as it hinted at first in February.
- The Fed WILL engage in QE3, weakening the dollar.
As for the specifics of the trade: “We would recommend investors go short $/JPY at current levels of 82.80 for a target of 79 with a stop on a close above 84.50.”