Market volatility largely induced by renewed concerns of weakness in China have seen rise in safe haven flows for the Yen. Across the crosses (against the AUD, ZAR, MXN, TRY ...), the yen has gained over 5% in the first week of the year.
The Japanese currency is deriving support from the speculative position as well, as the latest IMM report shows speculative investors are net-long JPY for the first time in the last three years.
However, it will not be long before the BoJ takes note of the Yen's rise, as inflation target keeps fading with declining oil prices. This will keep at bay any expectations for some run-away gains in the Yen.
But for now, with volatility the rule of the day, global risk sentiment will continue to remain the main driver of the Japanese Yen.
