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Fundamental Forecast for JPY: Do you want to see how retail traders are currently trading the Japanese Yen? But after resistance showed around the Chart prepared by James Stanley. The big item of concern around the Yen from this week is something that cannot be found on the economic calendar , and this is also something that can keep the currency on the move for the foreseeable future.
On Thursday, indications began to show that President Trump is beginning to set his sights on Japan for tariff discussions. And while that report was initially somewhat walked back considering that it was published in an op-ed, follow-thru indications appear as though this may be something to contend with in the near-term.
Japan is vulnerable here. Shinzo Abe came to power on the back of this strategy almost six years ago; and last month Japanese inflation came in at. Up until now, the general belief was the tight trading relationship between the US and Japan may leave the island nation unscathed around the topic of US tariffs; but that appears to be changing in front of our very eyes and, as such, this is something that should not be discounted.
That was a big statement considering the confusion that showed after the August BoJ rate decision. There are a number of high-impact macro events elsewhere, however, and recent themes around risk aversion will likely remain of concern. The big item of importance appears to be external in nature around the development of this theme of tariffs.
Two significant forces appear to be at odds in our current backdrop: On one side we have the Bank of Japan which is continuing to try to push weakness into the Yen by avoiding tighter policy and openly telegraphing doing so as taken from Mr.
On the other side, we have exogenous forces that can bring about Yen strength, and this is largely looking at themes around global risk aversion that have begun to grow in prominence this summer.
As such, we will hold the forecast at neutral until market prices reflect this potential alteration in the backdrop of JPY and bigger-picture, the Japanese Economy.
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