Why This Week Is Pivotal for the Markets

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Part 7
Why This Week Is Pivotal for the Markets PART 7 OF 7

Why the Japanese Yen Depreciated Last Week

Japanese yen depreciated 0.99%

The Japanese yen (JYN) lost out to increased risk appetite thanks to softer-than-expected tariffs and the positive geopolitical development involving US President Donald Trump and North Korea’s Kim Jong Un. Also driving the yen higher were the comments from the Bank of Japan’s governor, Haruhiko Kuroda, who tried to take back his comments about the policy shift toward tightening.

For the week ended March 9, the yen (FXY) closed at 106.80 compared to the US dollar (UUP), an appreciation of 0.99%. Japanese equity markets (EWJ) returned to strength, with the Nikkei 225 (JPXN) posting a weekly rise of 1.4% in the previous week.

Why the Japanese Yen Depreciated Last Week

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Speculators decreased bearish bets on the yen

The Japanese yen’s (YCL) speculators decreased their net short positions on the yen for a fourth consecutive week, according to the latest Commitments of Traders (or COT) report, which was released on March 9 by the Chicago Futures Trading Commission (or CFTC). 

On March 6, speculators of the Japanese yen had a total net short position of 87,000 contracts compared to 97,000 short contracts in the previous week. These positions were from before the tariff announcement and the Bank of Japan’s statement, and they may have changed in response to increased risk appetite.

The week ahead for the yen

This week, there are no major economic data scheduled to be released from Japan. Key drivers for the yen’s price action include increased risk appetite and the market’s reaction to the US inflation report on March 13. A decrease or a stable inflation report could help improve risk appetite, thereby reducing the demand for the yen this week.


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