BTMU FX Strategy Research notes that the JPY has strengthened marginally overnight resulting in USD/JPY falling back towards the bottom of this year’s range between the 110.00 and 115.00 levels.

“A softer than expected Chinese trade report for July which revealed that export growth slowed to an annual rate of 11.2% has weighed on risk sentiment. The risk of a break to the downside for USD/JPY is building.

Over the past month, the yen has firmed as the market has on the whole dampened expectations over the pace of the shift to tighter monetary policy by overseas central banks. Building tensions between North Korea and the US could be offering some support for the yen at the margin. It remains one potential trigger for a sharper than expected strengthening of the yen in the year ahead.

The upcoming negotiations to extend the US debt ceiling and pass a budget for next year in the autumn could also prompt a test of the bottom of USD/JPY’s current trading range in the coming months,” BTMU argues.

Source: BTMU Research