Difficult weekend for the yen

This weekend, the G7 finance ministers meet in Singapore where they might discuss the latest weakness in the Japanese currency. Last April (on Easter weekend in Romania), the G7 officials urged countries with large trade surpluses (notably China and Japan) to let their currencies rise. As a result, the USDYEN plunged 900 pips, a roughly 2% appreciation for the yen. Will it happen the same or the opposite this time? We'll see..

What's interesting is the situation of the commitment of traders in the futures markets in the US regarding the yen.

As we notice in the chart above, on Tuesday this week (when the numbers are reported), the commercials were at historical extreme net longs while the open interest is the highest ever. This means that the commercials (futures market participants that hedge their commercial exposure on the Japanese currency) expect the Yen to depreciate even more, though the extreme levels require cautiousness because the whole picture can change radically until next Tuesday following this weekend G7 meeting.