We designed a bearish AUDJPY view through a calendar spread of one-touches (short a 3m one-touch put, long a 6m) to arrest the good-bad dichotomy in Trump's policy platform (an initial focus on pro-growth fiscal policy followed by a dawning realization about the anti-growth consequences of trade and currency policy).

AUDJPY was initially lifted by more than we had expected by the reflationary increase in global bond yields, and as such the trade has not carried as well as we had anticipated. Nevertheless, we are well positioned to bleed into a short AUDJPY position as the Administration makes waves with a less conventional focus on international monetary and currency policies.

The yen may have lagged during the initial phase of the dollar correction (relative to how much JPY sold-off during the post-election euphoria). In many respects, Prime Minister Shinzo Abe’s trip to Washington and Florida to meet and play golf with President Trump went as well as the Japanese leader could have hoped. For now, it seems that Japan has got relief after Shinzo Abe’s visit with Trump.

Sold 3m bought 6m AUDJPY 87.0 one-touch puts in 0.69:1 notional for net premium 31.0%.