What Drove the Japanese Yen Higher Last Week



Yen continued to depreciate

The Japanese yen (JYN) managed to close higher against the US dollar after posting four consecutive weekly losses. Last week, the Japanese yen (FXY) closed at 111.86 against the US dollar (UUP), appreciating 0.69%. The US dollar’s weakness was the major factor contributing to gains in the yen. Japanese elections are scheduled for October 22, and they’re no longer contributing to uncertainty. Japanese Prime Minister Shinzo Abe is widely expected to win these elections, which is likely to help maintain the status quo in the economy and the markets.

Japanese equity markets (EWJ) remained upbeat with the Nikkei 225 (JPXN) posting a weekly gain of 2.24% for the week ending October 13. Slowly rising global demand has been beneficial for Japanese companies because most of these companies depend on exports for revenue.

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Speculators decreased their bearish bets on the yen         

Yen (YCL) speculators added 16,776 short positions in the yen, as per the latest “Commitment of Traders” (or COT) report, released on October 13 by the Chicago Futures Trading Commission (or CFTC). The total net speculative short positions rose to 101,419 contracts, compared to 84,643 short contracts for the week ending October 6.

Week ahead for the Yen

Japan reports a few important economic reports this week. The Reuters manufacturing Tankan survey is due to be reported on Tuesday, and the export data for September is slated for Thursday. Apart from these economic indicators, uncertainty about the Japanese elections and the US dollar’s weakness are likely to impact the yen’s performance this week.


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