As has been widely noted, the Japanese yen has been bid higher this year as global investors have sought safer assets, making it one of the best-performing developed market currencies. That has helped the CurrencyShares Japanese Yen Trust (NYSEArca: FXY) to a year-to-date gain of nearly 10%, easily one of the best showings among currency exchange traded funds.
The yen currency appreciated to ¥108.35 per U.S. dollar mid-Thursday and earlier traded as low as ¥107.67 per dollar, its strongest level since October 2014.
The JPY has experienced one of its biggest daily rallies since August as traders remain unconvinced that Japanese officials will do what it takes to curb the gains, even as a Ministry of Finance official stated that recent moves have been one-sided and that authorities will act accordingly, reports Taylor Hall for Bloomberg.
The statements from Japanese officials are “all the kind of stuff you typically hear before they pull the trigger,” Daragh Maher, head of U.S. foreign-exchange strategy at HSBC Holdings Plc, told Bloomberg. “But the market wants to see their money before it gets scared.”
However, the yen’s strength has prompted questions regarding just how long the currency will keep soaring and if it is vulnerable to a near-term pullback.
[related_stories]“Trend following traders are jumping on the bullish Yen bandwagon as the currency is currently hovering near highs not seen since October 2014 vs. the U.S. Dollar. Right now it appears that traders do not fear any currency intervention by the Bank of Japan (BOJ) to help weaken the value to the Yen despite the difficulties a stronger yen is causing the country’s exporters,” according to OptionsExpress.
The dollar has been weakening against other developed currencies, the greenback has strengthened against emerging market currencies, notably against commodity producing countries and China. However, the greenback has recently shown signs of perking up, but that is not deterring some traders from making bullish yen bets.
“Prices are currently at their highest levels since October 2014, but appear to have become overbought as the 14-day RSI has broached 70. Upside resistance is seen at the October 15 high of 0.9510, with support found at the March 17 high of 0.90565,” adds Options Express.
CurrencyShares Japanese Yen Trust
