EFTA Document EFTA01451190

9 January 2014 FX Blueprint: Thin end of the wedge Trade 3: Leverage the USD/JPY skew: The supposed stalling of Abenomics 'third-arrow' reforms, uncertainty on tapering and likely poor investor timing in the USD/JPY trade has seen risk reversals diverging from spot for much of the second half of 2013. The current level of divergence, at <1.9% percentile over the past decade, is nearing historical extremes (chart 4). Since the '08 financial crises there had been only two episodes wh