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Jan 07 - 08:55 AM

USD/JPY - COMMENT-Low Chance Of Seeing Black Swan While USD/JPY Sub-120

By Rob Howard  —  Jan 07 - 06:41 AM

Jan 7 (Reuters) - The possibility of Japan's ministry of finance unexpectedly ordering the Bank of Japan to intervene in forex markets to strengthen the yen should remain low while USD/JPY remains south of 120.

USD/JPY, which hit a five-year EBS high of 116.35 this week, has been below 120 since February 2016.

On Friday, Japan's Finance Minister Shunichi Suzuki said Japan will "closely watch currency market moves and their impact on the Japanese economy" when he was asked if the weakening yen was negative for Japan's economy. nL4N2TN0NN

Japanese policymakers have traditionally favoured a weak yen, although Japanese domestic media and some market participants have warned of its potential demerits.
Recent J.P. Morgan analysis said the yen is at its weakest for 50 years in real terms. nL4N2TM14E

The net JPY short position held by IMM speculators has halved since reaching 107,624 contracts, its highest level since December 2018, at the start of November.
IMM speculators have been net JPY short since March 2021.

Related comments: nL1N2RO0T6nL1N2RH01L

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Source:
Refinitiv IFR Research/Market Commentary

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