The Japanese Yen finished the week almost exactly where it began, but continued consolidation within a tight range suggests a breakout is inevitable. When, where, and how might the JPY move?
Record-low volatility for the Japanese currency leaves us looking for clues on when the Yen might finally break its recent range. Yet if there’s going to be a fundamental catalyst it could very well come on upcoming Japanese Consumer Price Index inflation figures. A key question remains whether the Bank of Japan will look to boost its aggressive Quantitative Easing measures. BoJ Governor Kuroda emphasized the central bank is only halfway to achieving its inflation target and talk of pulling back monetary policy stimulus is premature. And indeed it might take a significant surprise in CPI inflation results to force a large reaction in the Yen. It is then little surprise to note that 1-week volatility prices on US Dollar/Japanese Yen finished Friday at record lows. Or in other words: traders have never bet on/hedged against slower JPY moves.