Last week, traders that went long on the Yen saw nice profits. The Yen rose close to 300 pips against the Dollar, sending the USD/JPY towards the 92.50 level. The JPY also rose against the Euro, and marked over 600 pips rise against the Pound.
It seems that the Yen was boosted last week much due to the end of election uncertainty following a win for the opposition Democratic Party of Japan. The elections' end even supported the Yen up to a seven week high against the Dollar. Another reason for the Yen's appreciation last week is the trade balance report which was published on Tuesday. This report measured the difference in value between imported and exported goods during July, and delivered a 0.19T figure. This means that the Bank of Japan (BoJ) is succeeding in its target to recover the Japanese economy with strong exporting activity. The BoJ keeps its low interest rates mainly for this purpose, and it seems that as long as Japanese exports will continue to expand, the Yen is likely to rise further and further.
As for the week ahead, a batch of data is expected from the Japanese economy. Traders are advised to focus on the monetary Base and the Capital Spending reports, as they are likely to create large volatility in the market. The Capital Spending report measures the total value of new capital expenditures made by businesses, and thus tends to have a large impact on the Yen.