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Japanese Yen Futures

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Free in-depth analysis of the Japanese Yen futures market written by a professional Japanese Yen trader.

March 21, 2013

Japanese Yen Futures Trader, Van Commodities, Inc.

The recent price action for the Japanese Yen Future (J6M13) may signal that the initial adjustment for the currency has been made. The roughly twenty percent depreciation in the yen versus the US dollar, since the end of September, appears to have discounted the implications for the fiscal and monetary policy changes demanded by new Abe administration, at least in the near term. It would not be surprising to see J6M13 trade in a wide range for a period of time.

 

Several intermediate and longer term momentum indicators are deeply oversold. Short term indicators have rotated up from an oversold condition and would be supportive of further upside action. Over the near term initial support may come in at 1.0340-1.0432, with strong support around 1.0100, if the above level gives way. Initial resistance in the near term may come in at 1.0650-1.0800. Over the intermediate term strong resistance may come in at 1.1000-1.1300.

January 6, 2013

Japanese Yen Futures Broker, Van Commodities, Inc.

Since the middle of September the Japanese Yen future (JYH13) has traded down close to thirteen percent.  Shinzo Abe’s win as Prime Minister of Japan several weeks ago and his insistence that the Bank of Japan ease monetary policy further along with targeting an inflation rate of two percent may continue to pressure JYH13 over the longer term. Over the near term JYH13 may catch a bounce in the lead up to the BOJ’s next policy meeting January 21, 2013. A discussion about inflation targeting at the BOJ meeting may lead to policy changes which are not as comprehensive as the market presently expects and profit taking may unfold in the lead up to the meeting.

 

JYH13 is oversold on both a short and intermediate term time frame based on several momentum studies. The currency’s trend still appears to be down, but market speculation on further downside from these levels appears to be overdone. Over the longer term JYH13 may need to fall closer to the 1.0600 level. In the near term we may see JYH13 recover some of its losses. Initial resistance may come in at 1.1620-1.1750 and stronger resistance 1.1850-1.1940.

November 27, 2012

Japanese Yen Futures Trader, Van Commodities, Inc.

On a fundamental basis it appears that the Japanese Yen may be putting in a long term top and the price action over the past month seems to be supported by the technical set up. With weak economic data and the potential for a major change in monetary policy, as a result of Japan’s election December 16, 2012, the December futures contract (J6Z12) has traded down around five percent over the past month. The leader of the opposition Liberal Democratic Party (LDP), Shinzo Abe, has proposed that the Bank of Japan (BOJ) set an inflation target of two percent and has threatened to change the law, taking away the BOJ’s independence.

 

J6Z12 has traded down six percent, on an intraday basis, since September 13, 2012. The currency is oversold based on several momentum studies on both short and intermediate term time frames. Sentiment on the yen has also become negative over the past six weeks reflected by pricing in the options market. Although J6Z12 may be putting in a top on a longer term basis, the currency may find support and a tradable bounce in the near term. Initial support could appear 1.1800-1.2000 and then 1.1300-1.1600. Initial resistance should come in around 1.2420-1.2525 and further strong selling 1.2630-1.2750.

Japanese Yen Trader, June 3, 2012

The Japanese Yen future, basis the June contract (JYM12) has appreciated four percent verse the dollar over the past seven trading days. That increases competitive concerns for Japanese policy makers. With slowing global growth, renewed concerns over the Eurozone’s intractable economic and political issues the flight to safety trade into Japanese Yen continued Friday after the release of weak U.S. economic data. The weaker than expected U.S. economic data reported Friday included a smaller increase in Nonfarm Payrolls than forecast, an increase in the Unemployment rate and slower manufacturing growth reported by the Institute for Supply Managers (ISM).

The negative effect on Japan’s economy from a strengthening Yen is becoming a greater concern for policy makers in Japan. On Friday, several Japanese officials, including Finance Minister Jun Azumi, publicly warned of the potential for currency intervention. Mr. Asumi was quoted s saying, “If these excessive moves continue, I will have to respond decisively.”

JYM12 has appreciated eight percent since May 15 on the flight to safety trade. The currency is back to levels where the Japanese implemented policy changes early in 2012 to weaken the currency. JYM12 is overbought based on several momentum indicators and profit taking could occur in the near future. JYM12 may find resistance at 1.2900-1.3050 area. On a pullback, initial support could appear at 1.2515-1.2630 and 1.2380-1.2420.

March 21, 2012

Commodities Broker, Van Commodities, Inc.

Since February 01, 2012, the Japanese Yen, based on the June futures contract JYM12 has lost roughly 10% of its value. The currency is oversold on a technical basis, using several momentum studies. Sentiment towards the Japanese Yen currency appears to be very negative. Speculative traders hold a large net short position, as per the most recent Commitment of Traders Report (COT). The net short position could result in a short covering rally that creates a trading bounce and an unwinding of the oversold condition. 

The JYM12 had a minor reversal in today’s trade and the 1.2000 area, which could turn out to be support, is roughly a 25% retracement from the June 11, 2007 lows to the highs of the move October 31, 2011 off of the Japanese Yen weekly futures chart. The next support down if 1.200 does not hold comes in around the 1.180 level. If the 1.2000 level holds, a trade back up into the 1.2200 – 1.2400 area is possible.

February 23, 2012

Currency Broker, Van Commodities, Inc.

Japan's latest GDP data released February 13, 2010 was reported down -2.3 percent on an annualized basis, coming in below the market consensus of -1.4. Q4 GDP versus the previous Quarter came in at a weaker -0.6 than the market expectation of -0.3 The factors having a negative impact on the GDP figures were a reduction in exports, as a result of the unrelenting Yen strength versus the dollar (USD) and government spending. On Friday February 10, 2012 Japanese Finance Minister Azumi was questioned by Parliament about the success of the yen currency intervention that took place at the end of October beginning of November, to restrain the yen, which was trading around 1.3279, basis the March futures, a historically high level versus the USD. It appeared too many market participants that the Finance Minister has not changed his stance on taking action against excessive and disorderly moves in the JPY in the future.

The JPY/USD, basis the March futures, appears to be stuck in a trading range. The upside of the range appears to be between 1.3160 -1.3200 a convergence between two trendlines Support appears at 1.28335, the 200 DMA and several trendlines which converge around the 1.2800-1.2850 level. Range traders will look to fade the high end and buy the low end and momentum traders may try to go with a breakout, one way or another. The reported MOF intervention undertaken over a six day period last year, referred to above, was thought to have been around $116 billion or 9 trillion yen, possibly capping the yen on the upside.