Week in FX Asia- Will Yen Buyers Wait For Muto?

It looks like a percentage of the market wants to reload by selling yen and going long dollars and euros. These are the same individuals who had off loaded similar positions ahead of the G20 meeting. Their change of heart has followed the news of the G20 communiqué, which does not take a strong stance on Japan's yen weakening policies. Also fueling their desires to short yen again was Friday's strong US Empire manufacturing report. From a technical perspective, the market is encroaching on large option barriers right hand-side for USD/JPY (94 &94.50).

Is there anything that can stop this selling of yen? Perhaps the knee-jerk reaction will come when the next new Governor of the Bank of Japan is appointed. If ex-MoF and BoJ official Muto becomes the chosen one, the market will initially see him as being less in favor of easing, allowing the market to buy back some of this yen. In the end it really does not matter who will be appointed Governor. Everyone eventually will have to fall in line with Abenomics.

 

WEEK AHEAD

* AUD RBA Policy Meeting Minutes
* EUR German ZEW Survey
* EUR German Consumer Price Index
* GBP Bank of England Minutes
* GBP Jobless Claims Change
* USD Fed Releases Minutes
* USD Consumer Price Index
* EUR German Gross Domestic Product
* CAD Consumer Price Index

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Dean Popplewell

Dean Popplewell

Director of Currency Analysis and Research at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2007, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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