On the other hand, speculators are licking their lips. The latest U.S. futures market data on Friday showed that hedge funds are sitting on their largest short yen position in 17 years and second largest ever.
These CFTC figures are for the week through last Tuesday, and the yen has fallen another 2% since then.
Japanese officials have expressed their disquiet with the yen’s weakness, but the longer that talk is not backed up with action, the more hollow it rings. Will traders have 160.00 dollar/yen in their sights this week? You would think so.
Other countries in Asia are becoming increasingly uncomfortable with exchange rate developments – Indonesia has raised rates to counter the rupiah’s weakness, Vietnam and India have intervened directly in the FX market buying their currencies, and South Korea has indicated it will follow suit.
Looking to the week ahead, the U.S. Federal Reserve’s policy decision on Wednesday may tempt FX and other markets to play it safe for the next few days.
Stocks appear to have shaken off the wobbles after post-earnings rallies in Alphabet and Tesla shares, in particular, boosted a broader recovery on Wall Street. The S&P 500 has recouped half its losses from earlier this month, the Nasdaq and MSCI Asia ex-Japan even more.
Highlights from the Asian economic calendar this week include Chinese PMIs, Bank of Korea meeting minutes, inflation from South Korea and Indonesia, and Hong Kong GDP.
Figures on Saturday from Beijing, meanwhile, showed that industrial profits in China fell 3.5% in March, slowing the cumulative rise in the quarter to 4.3% from 10.2% in the first two months of the year.
Also in China, Tesla CEO Elon Musk on Sunday arrived on an unannounced visit in Beijing, where he met Premier Li Qiang.
