Nvidia shares pop as analysts dismiss AI bubble concerns
Everyone’s glued to Nvidia’s (NASDAQ:NVDA) latest celestial earnings arc. Still, the more consequential chart for Tokyo FX denizens is USD/JPY — a pair now pressing into 157 with the kind of slow, ominous momentum that policymakers in Tokyo pretend to tolerate but absolutely do not welcome. We’re less than a figure from the zip code where “verbal vigilance” turns into the unmistakable thump of real intervention orders.
But here’s the underappreciated reality: Tokyo knows exactly how bad the setup is.
Intervening now, with the Fed still leaning hawkish and U.S. yields stubbornly high, would be swimming upstream with concrete boots. They understand that FX intervention in a pro-USD macro regime isn’t shock therapy — it’s a headline that lasts an hour.
This is precisely why their modus operandi shifted over the past year.
Recall 2024:
They stepped in on dollar weakness, not dollar strength — right after a softer U.S. inflation print had already started to pull USD/JPY lower. They hammered the move. Intervention worked because it reinforced a trend that was already turning.
That’s the context missing from most commentary.
If they intervene now, they’d be leaning directly into a still-firming U.S. dollar regime.
And everyone knows what happens when a central bank tries to use FX operations to fight interest-rate differentials: the market takes it as an invitation to buy the post-intervention dip, not a deterrent.
That’s the fear hovering over their decision to intervene.
A premature intervention at these levels risks opening the door to a full assault on 160 rather than shutting it.
It would look defensive, not decisive. It would tell macro funds that Tokyo is nervous — and once you signal anxiety, you encourage speculation rather than repel it. For traders with billions behind them, that’s all the invitation they need.
In other words, the wrong intervention here could perform the opposite function:
Instead of drawing a line in the sand, it would mark the starting gun.
This is why 157–160 feels less like a simple range and more like a political corridor.
Tokyo isn’t just managing charts — it’s managing credibility.
They know the macro tide is still with the dollar.
They know the BoJ’s normalization is intentionally glacial.
They know Japanese rates are still negative in real terms.
And they know that the marginal dip buyer in USD/JPY — hedge funds, real money, corporates — still finds carry irresistible.
Which is why this phase of the rally feels different: it isn’t exuberant; it’s brittle. The CFTC short-JPY position remains heavy, but this move isn’t a clean macro conviction trade — it’s the last, stretched chapter of a carry-fuelled process.
For traders, that creates an awkward truth:
The closer we inch toward 158–160, the less you’re trading yen and the more you’re trading Tokyo’s tolerance.
This is where spot becomes binary and optionality becomes king. Better to own the reversal than chase the extension. Structured downside in USD/JPY, JPY calls against high-beta crosses — that’s the way to stay paid without standing in front of officials who, when they finally act, do so with a sledgehammer.
Because here’s the one thing that hasn’t changed:
When the MOF decides enough is enough, they don’t whisper.
They hit the tape like a falling steel beam.
For now, USD/JPY is still climbing the high wire.
The market is still fixated on Nvidia’s orbit.
And Tokyo is hoping the wind doesn’t shift before the fundamentals finally do.
Two Trades for 2026: One Already Aboard, One Still Laying Its Foundations
Every now and then the market hands you a pair of trades that don’t just rhyme — they harmonize. One you already own with conviction, the other you accumulate with patience. For me heading into 2026, gold is the express train that has already pulled out of the station, and the yen is the foundation stone quietly being lowered into place. Different journeys, same destination: value rediscovered.
The latest global survey of heavyweight fund managers only reinforces what seasoned macro traders feel in their bones. A third of respondents pointed to the yen as the top-performing currency of 2026, followed closely by gold and then the U.S. dollar. That’s striking when you consider the yen’s humiliating run this year — gaining a trivial 1% against the dollar and posting the worst G10 performance. A currency so beaten down it barely casts a shadow, now suddenly crowned next year’s comeback champion. Markets love nothing more than an underdog with a catalyst.
And the yen has catalysts in abundance. Its undervaluation is now legendary: a once-mighty currency trading like a bargain-bin asset because the BoJ couldn’t quite articulate a clean path out of decades-long easing. Add the election of Prime Minister Takaichi — a political vote for easy money and fiscal largesse — and you can see why 2025 left the yen staggering. But that’s the irony. The deeper the slump, the more generous the forward return once the cycle turns.
Survey data shows global investors have carried a net underweight in Japanese equities for more than a year. That persistent disengagement is itself a setup: when no one owns the story, the smallest shift in tone can reprice the entire arc. And you see flickers of that pivot already — traders positioning for the chance that Japan eventually delivers a more credible hiking trajectory, or that intervention risk grows as USD/JPY presses uncomfortably toward the 160 frontier. The yen doesn’t need a hawkish BoJ to recover value; it just needs the market to believe the asymmetry has finally flipped. That’s what 2026 is whispering.
Gold, meanwhile, is no whisper — it’s a brass section. The metal is already in full stride, trading at record highs as central bank buying, geopolitical frictions, and retail haven flows converge. It’s the anti-narrative asset: when the world’s political and trade architecture frays at the edges, gold grows stronger. When fiscal paths stretch credibility and monetary policy lurches between oversteer and understeer, gold becomes the anchor against the drift. And when global confidence thins — whether in valuations, institutions, or political stability — gold is the instrument that tunes the room.
This year’s rally wasn’t a fluke; it was a reawakening. Central banks, especially outside the G7, have grown more assertive in diversifying their reserves. Emerging Asia and the Middle East are buying not as traders, but as stewards. That bid is patient, structural, and price-insensitive. Add in a dollar that’s logged its weakest year since 2017, complicated further by Washington’s policy ambiguity, and you have the makings of a secular repricing.
The survey’s takeaway is simple: the market’s most seasoned allocators see 2026 through a prism of accumulated imbalances. The yen is too cheap for a country of Japan’s balance-sheet strength, and gold is too essential to a world losing its trust in long-term promises. One is a value play, the other a defensive free option with momentum. One needs time; the other needs only continued uncertainty.
So yes — there are two trades I’m backing into 2026.
Gold, all aboard and picking up speed.
And the yen, still laying its foundations like a craftsman building toward a payoff that always looks obvious in hindsight.
Different paths, same story: the market eventually comes home to value.