Monday 5 August.

Following a very relaxing week in Thailand, I'm still here for another two weeks, but feeling refreshed and powered by watermelon shakes, it's now time for me to get back trading.

In the two weeks leading up to my break, there has been a little angst in the air. The VIX had risen above 16, the JPY was strong due to the carry trade being unwound. But when I boarded my outbound flight, I envisioned the VIX falling, the upcoming BOJ meeting passing by uneventfully and the 'soft landing' narrative eventually shining through, leading to a return of 'risk on' trades.

And the exact opposite has happened. The BOJ hiked rates, the VIX has shot above 23, US data, particularly NFP, has been perceived as too soft. The US 10year yield has dropped below 4 in a classic 'risk off' move. There are lots of suggestions the FED has been too slow cutting rates. I'm reading something called the SAHM rule indicates a US recession is on the way and a hard landing is very much on the markets mind.

Whilst personally, I'm still in the 'soft landing' camp. It will now take a few positive US data releases for that narrative to return. And in the meantime, the 'risk off' tone is too strong to ignore and I do think long JPY trades are an option at the moment.

Since it's my first day back making decisions, I'm going to observe, see how the market reacts to US PMI data. And if the 'risk off' sentiment remains, I am prepared to long the JPY on pullbacks. And I didn't think if be saying that a few weeks ago.

Feel free to email any thoughts or questions: johnelfedforexblog@gmail.com