​Yen rallies to its highest level since mid-September

2023-11-29
Summary:

The US dollar fell to a 2-month low against the yen as Fed Governor Christopher Waller hinted at a potential rate cut in the coming months on Wednesday.

The US dollar tumbled to its weakest in more than two months against the yen on Wednesday after the hawkish Fed Governor Christopher Waller signalled a possible rate cut in the coming months.

The CFTC data shows that funds cut their net long dollar position against a range of major and emerging currencies to $4.5 billion in the week ending 14 Nov from $10 billion the week before.


That weekly swing marked its biggest since July and the second largest this year. Meanwhile their net short yen position declined by $2 billion from the biggest in six years.


Against the backdrop of still stretched positioning, Japan's top business lobby Keidanren will discuss at next month's executive meeting the potential negative impact of the yen's weakness on the economy.


The group used to favour a weak yen to make exports more competitive so a shift in the stance could provide a springboard to end the BOJ’s ultra-loose monetary policy.


Nevertheless, board member Seiji Adachi said the central bank does not use monetary policy as a tool to arrest yen declines, ruling out the chance of a near-term policy tweak.

USDJPY

The yen continued to rally below the 50 MA. AS such a further decline towards 146 seems likely but it is too early to call a fundamental reversal.


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