USD/JPY Rally Shrugs NFP Disappointment

USD/JPY surged anew to start the new week, nearly reaching 99. Last week the yen was the weakest performer while the Swiss franc and pound led the way. Positioning data showed speculators paring back yen shorts before the BOJ decision. On Friday,  2 USDJPY trades. 1 GBPJPY and USDCAD hit all targets, while 2 new USDCAD trades were added and are in progress. All these can be seen in the Latest Premium Insights.

USD/JPY climbed more than a full point from Friday's close, touching as high as 98.78 while EUR/JPY hit 128.32. A Nikkei report said the Bank of Japan plans to 1.2 trillion yen of government bonds this week. The rapid buying underscores the urgency from the BOJ and pushes USD/JPY toward the psychological 100 zone.

Late on Friday, Portugal's constitutional court ruled certain budget cuts illegal. On the weekend, PM Coelho reaffirmed his commitment to the EU/IMF bailout and said it is discussing replacement measures.

The euro fell 30 pips to 1.2970 at the open but quickly rebounded to 1.3000.

The week begins with Japanese current account data at 2350 GMT with expectations at a surplus of about 500 billion yen.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -66K vs -49K prior JPY -78K vs -89K prior GBP -65K vs -66K prior AUD +84K vs +85K prior CAD -65K vs -63K prior NZD +18K vs +17K prior CHF -10K vs -13K prior US Dollar Index longs at 54K vs 54K prior

Speculators trimmed yen shorts at the worst possible time but speculators were still well-positioned headed into the BOJ decision. The increase in euro shorts shows that a large portion of the market is underwater on euro shorts and that could add fuel to the recent rally. Positioning changes in other currencies were slight.