USD/JPY: the outlook for relative central bank policy weighs - Scotiabank
JPY is outperforming most of the G10 currencies and rising beyond last week’s multi-month high.
"The outlook for relative central bank policy is providing support to JPY as market participants re-evaluate their expectations for the BoJ—specifically its yield curve control policy.
Constructive comments from BoJ board member Suzuki have signalled a willingness to reconsider the extent of policy accommodation in the context of progress toward the 2% inflation target.
Extended speculative short positioning has left JPY vulnerable to adjustment, with a doubling in the gross short JPY CFTC position in the period since mid-September. The gross short position is currently at levels last seen in 2007."