Analyzing the Japanese Yen’s Key Drivers This Week

Market Behavior: What to Expect in the Last Week of Summer PART 7 OF 8

Yen remained range bound

The Japanese yen (JYN) remained in a tight range last week. Traders remained focused on central bankers at the Jackson Hole symposium. For the week ending August 25, the Japanese yen (FXY) closed at 109.36—compared to the US dollar (UUP). Last week the yen fell 0.16%. Economic data reported from Germany included the Flash manufacturing PMI, which was reported above the market’s expectation at 52.8. The Tokyo Core CPI rose 0.4%, while the national core CPI was 0.5% and equaled the market’s expectations.

Japanese equity markets (EWJ) remained largely unchanged—the Nikkei 225 (JPXN) reported a weekly loss of 0.09%.

Speculators reduced bearish bets on the yen

The Japanese yen’s (YCL) speculators reduced their bearish positions for the sixth consecutive week as the US dollar continued to depreciate. According to the latest “Commitment of Traders” report released on August 25 by the Commodity Futures Trading Commission, currency market speculators’ net positions in the yen (YCS) have fallen by 3,406 contracts. The total net speculative positions stood at -74,086 contracts—compared to -77,492 contracts the previous week.

Continued demand for the yen this week?

There could be a rise in the demand for the Japanese yen as US political uncertainty continues. Japan will release minor economic data this week including the core CPI, retail sales, household spending, and manufacturing PMI data. The main risk for the yen is an announcement from the Trump Administration about tax reforms. The announcement could be positive for the US dollar.

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