Another week of consolidation

The Japanese yen (JYN) remained confined to a tight range, as no major economic data was reported from Japan. Most of the price action in the currency was a result of the US dollar (UUP) movement after the non-farm payroll data.

The Japanese yen closed the week ended August 4 at 110.69 against the US dollar compared to 110.67 for the week ended July 28. Most of the losses for the yen were recorded on August 4 after the NFP data, but the amount of the losses is not yet known. The Japanese yen (FXY) has been moving in tandem with the US dollar for most of this year, with January being the only exception.

A Look at This Week’s Trend Line for the Japanese Yen

Japan is the only developed economy that has not signaled any monetary tightening. Its central bank is expected to remain accommodative with respect to its monetary policy for the remainder of 2017. It is likely that any gains in the yen would be limited for the time being.

Japanese equity markets (EWJ) remained muted in the previous week, with the Nikkei 225 (JPXN) posting a weekly loss of 0.04%.

Speculators reduced bearish bets on the yen

Japanese yen speculators have turned bearish on the currency. According to the latest Commitment of Traders (or COT) report, released on August 4 by the Chicago Futures Trading Commission (or CFTC), currency market speculators’ net positions have declined by 9,293 contracts. The total net speculative positions stood at -112,196 contracts compared to -121,489 contracts in the week before.

Another calm week ahead

The sluggish price action in the yen is expected to continue in this week with no major data from the Japanese and the US economy. US inflation and Federal Reserve speeches will remain in focus as markets should interpret these data points to predict the next move from the Fed.

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