The Japanese Yen continues to weaken after completing the 3 wave move under $USDJPY 108 last week, yen weakness has accelerated as the British Pound gets back to Brexit night levels. GBP demand has taken $GBPJPY up to 151.54 after triggering large stops.
The US dollar had been rallying ahead of Janet Yellen’s speech on financial stability at Jackson Hole, 100 pips in USDJPY and EURUSD. Her speech brought nothing new or dramatic and the dollar sold off immediately.
Japan’s economy is benefiting from higher exports. Their trade surplus for July came in higher ¥ 418.8 billion then the expected ¥ 327.1 billion. June saw ¥ 439.8 billion. Exports to the U.S. +11.5% y/y, to China +17.6% y/y
The latest move from the yen comes as no surprise as we wrote about yen shorts building with $JPY short positions are at their highest since 2014. The herd has been caught again, part of it is the U.S. traders obsession with the dollar index rather than the currency itself.
The IMF issued its External Sector Report saying U.S. dollar was overvalued by 10 percent to 20 percent, the Euro was 10-20 percent too low for Germany’s fundamentals.
Yen shorts continue to build despite the Japanese currency gaining, CFTC data show $JPY short positions are at their highest since 2014. Is the herd wrong?
It was a fail with key inflation, retail sales ans consumer sentiment all missing consensus expectations. The only bright spot was industrial production and capacity utilization.