AlwaysFree: Yen Starts Year On Front Foot As Traders Eye Dollar Cliff Edge

• Traders are positioning for further strength in the yen
• Yen had strong end to 2022 amid BOJ policy shift bets

According to Bloomberg article published on January 2, 2023, the yen started 2023 with modest gains Monday as traders weighed the risk of further technical strength amid thin holiday trading.

The Japanese currency climbed as much as 0.3% to 130.77 per dollar in early Tokyo trading. A close below the dollar-yen’s August low of 130.41 would open up the door for further declines in the pair, according to chart watchers.

Some investors opened small short-dollar positions on the chance a break occurs in the absence of normal market liquidity, said some Asia-based FX traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly.

The yen has climbed some 16% from its October nadir amid government intervention, hopes for slowing US rate hikes and speculation over the possibility of a policy shift from the Bank of Japan this year. The BOJ’s surprise December decision to tweak its yield curve control parameters is seen by many as a sign its ultra-easy monetary policy might soon be coming to an end.

Tags: All Products,AlwaysFree,Asia Pacific,English,Japan,NEA