– USDJPY faces the critical yearly low near 100.75.
– AUDJPY, EURJPY dive accelerate; GBPJPY resilient.
– The forex economic calendar lightens up in the North American session.
The most recent CFTC’s Committment of Traders report showed that net-short Japanese Yen positioning increased to 65K contracts from 61K contracts, a curious development during what has been a respectable rally by the Yen in May. In context of the Bank of Japan’s decision last night, evidence is building for a major Yen turn around.
In Japan, where food and energy prices are soaring and wage growth is stagnant, consumers are recently dealing with another shock to their purchasing power – the VAT hike in April. Accordingly, with the explosive Q1 GDP figure in their back pocket (+5.9% annualized), Japanese monetary officials have decided that the country is well on its way to achieving the +2% inflation target previously outlined.
To me, this is simple math: the market is skewed short JPY; and the BoJ is taking a stand against further easing. With the US economy sliding and the ECB looking down the path of its own expansive, non-standard easing measures, there may be further room for the USDJPY and EURJPY to run lower.
— Written by Christopher Vecchio, Currency Analyst
Originally Published at: http://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/top_fx_headlines/2014/05/21/USDJPY-Tests-Yearly-Low-as-BoJ-Refrains-On-Cusp-of-Major-Yen-Rally.html