JAPANESE YEN TALKING POINTS
USD/JPY may face a more bearish fate over the remainder of the month amid the failed attempt to test the 2018-high (114.55), and recent developments keep the downside targets of the radar as the weakness in the exchange rate appears to be spurring a shift in retail interest.
USD/JPY RATE WEAKNESS SPURS SHIFT IN RETAIL FX INTEREST
USD/JPY may continue to chip away at the advance from the October-low (111.38) as it snaps the monthly opening range, but the retail crowd appears to be fading the weakness in the exchange rate as sentiment bounces back from an extreme reading.
The IG Client Sentiment Report shows 43.8% of traders are net-long USD/JPY compared to 40.2% last week, with the ratio of traders short to long at 1.28 to 1. Keep in mind, traders have remained net-short since November 2 when USD/JPY traded near 113.20 even though price has moved 0.2% higher since then. The major U.S. holiday has a tendency to produce thin market conditions especially going into the final days of November, but current updates show the number of traders net-long is unchanged from yesterday and 24.2% higher from last week, while the number of traders net-short is 11.0% higher than yesterday and 13.4% lower from last week.
A pickup in volatility raises the risk for a material adjustment in retail interest, with a further accumulation in net-long position likely to spur a shift in the IG Client Sentiment index, which may mimic the developments from early October as the gauge bounces back from a similar reading.
Looking ahead, Fed Vice-Chairman Richard Clarida and Chairman Jerome Powell are both scheduled to speak ahead of the FOMC Minutes due out on November 29, and it seems as though the central bank will continue to prepare U.S. households and businesses for higher borrowing costs as the committee fulfils its dual mandate for full-employment and price stability.
