Yen Outlook Unclear on Mixed Sentiment
USDJPY – Trading crowds remain aggressively net-long the US Dollar against the Japanese Yen and have been long since the pair traded at 90, giving us consistent signal that the USDJPY could fall to further lows. Yet it serves to warn that recent CFTC Commitment of Traders data showed that Non-commercial futures traders were heavily long the Japanese Yen (short the USDJPY). Very one-sided positioning warns that the USDJPY could bounce on any sudden short covering.
The ratio of long to short positions in the USDJPY stands at 4.44 as nearly 82% of traders are long. Yesterday, the ratio was at 3.92 as 80% of open positions were long. In detail, long positions are 0.9% higher than yesterday and 7.3% weaker since last week. Short positions are 10.9% lower than yesterday and 3.5% weaker since last week.
The broader trend favors USDJPY losses, but we see little likelihood of major moves in the last two weeks of trading for 2011.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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