Yen Recovered on Amari's Comments, Aussie Position Turned Net Short

Yen rebounds in Asian session today after Japanese Economy Minister Akira Amari signaled his concern on recent depreciation of the currency. Amari noted that "excessive yen gains have be corrected a lot". And he warned that if yen extends losses "a lot", there will be "negative" effect on people's lives. He said it's the government's job to "minimize" that impact. Referring to recent rally in Nikkei and slump in JGB, Amari said that the government needs to "enhance the credibility of government bonds to prevent a rise in long-term yields." USD/JPY is held above 101.82 minor support so far in spite of today's dip and further rally is still in favor. However, EUR/JPY and GBP/JPY are both bounded in near term consolidations and show mild sign of weakness. And, we'd be cautious if deeper pull back in EUR/JPY and GBP/JPY would drag down USD/JPY.

Elsewhere, markets are relatively steady so far. Speeches from Fed officials will be a main focus this week. There has been increasing talks that Fed would taper its open-ended bond purchases as soon as this summer, possibly in June's meeting. Fed has been buying USD 85b in treasury and MBS to push down borrowing costs to boost recovery. Two events will be closely watched this week. Fed Chairman Bernanke will testify on Wednesday on the economy before the Joint Economic Committee of Congress. FOMC minutes will be release on the same day too. Meanwhile, Chicago Fed President Evans will speak about the economy and monetary policy today. New York Fed Dudley and St Louis Fed Bullard will speak tomorrow.

Latest CFTC data showed sharp deterioration in Aussie position on May 14 compared to the prior week. Others were relatively unchanged. However, note that Canadian dollar positions had improved during the period but that was well before the CPI data. We'll see if CAD net position deteriorated on the next batch of data. Euro net shorts rose again to -46.9k from -33.5k but is held above this year's low of -65.7k. Yen net position stayed in range at -88.4k net shorts. Sterling net positions was steady, with net shorts at -65.3k comparing to -63.1k. Aussie net positions deteriorated for the seventh straight week. Net positions turned to -13.5k net shorts from 6.6k net longs. Canadian dollar net positions improved to -44.4k net shorts, from -51.9 net shorts.