The JPY continued to weaken against the USD after leading indicator index continues to signal economic contraction. Japan's leading economic indicator index rose to 20, but has been below 50 for the third straight month. A reading above 50 indicates economic expansion in months ahead. Economists are predicting the JPY to remain range bound at the 110 level till the year end.
Today no news is expected from Japan, so the JPY should continue its downward trend, particularly against the high yielders, as long as carry trades are back in action. However it is also important for traders to follow the correlation between U.S equities and carry trades as this could give a strong indication as to the future direction of the JPY. Also it is important to note that the recent currency volatility could once again create risk averse sentiment and discourage carry trades, thereby rallying the JPY.
read more:NFP - Which Way Will The Greenback Sway?
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