Will the Fed finally pull the trigger next week? 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.
Shorting the yen seems foolhardy even if the BOJ is preparing another round of QQE to offset any Fed move.
Meanwhile, a slowing Chinese economy leaves the New Zealand dollar as the most vulnerable of the G10 currencies going forward.
Sell the Kiwi – vs USD as a China slowdown hedge, vs JPY is a Fed hike hedge, vs. AUD as monetary policy re-converges.