US DOLLAR TO JAPANESE YEN OUTLOOK: USD/JPY PRICE ACTION RALLIES WITH TREASURY YIELDS AS RETAIL FX TRADERS RAMP SHORT POSITIONS
- USD/JPY price action has spiked 145-pips over the last five trading sessions
- IG Client Sentiment data reveals a 16% increase in USD/JPY short positioning
- US Dollar to Japanese Yen could continue its climb alongside Treasury yields
USD/JPY has been on a tear higher since last Friday. In addition to a stretch of broad-based JPY weakness, the US Dollar appears to be rallying on the back of an upbeat July 2020 NFP report, as well as surging Treasury yields. Spot USD/JPY price action now trades higher by about 100-pips month-to-date.
USD/JPY PRICE CHART OVERLAID WITH TEN-YEAR TREASURY TO JAPANESE GOVERNMENT BONDS YIELD SPREAD: 4-HOUR TIME FRAME (08 JULY TO 13 AUGUST 2020)
Chart created by @RichDvorakFX with TradingView
That said, retail FX traders have ramped their short positioning on the Dollar-Yen over the last 24-hours. This is indicated by the latest IG Client Sentiment Report, which details a 16% rise in USD/JPY shorts on the day as discussed in the webinar recording above.
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USD/JPY SHORT POSITIONING JUMPS – IG CLIENT SENTIMENT (13 AUGUST 2020)
The upcoming release of monthly retail sales and consumer sentiment data stand out as potential catalysts – particularly if the reports deviate materially from market expectations. According to the DailyFX Economic Calendar, retail sales data is due Friday, August 14 at 12:30 GMT, and the consensus estimate is looking for a 1.9% rise month-on-month. Preliminary consumer sentiment data is slated to cross the wires shortly after at 14:00 GMT, and the median economist forecast stands at a reading of 72.0 for the current month.
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— Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
