Understanding Japanese Yen Futures


One of many world’s eight main currencies, the Japanese yen (JPY) is seen as a mainstay of world finance. The Financial institution of Worldwide Settlements Triennial Survey (2019)[1] has the yen concerned in US$1.1 billion in common day by day turnover on the over-the-counter (OTC) forex markets. This lofty valuation earned the JPY a rank of third, accounting for 17 % of day by day commerce.

Along with its place on the OTC foreign exchange markets, the JPY can also be traded on the Chicago Mercantile Alternate (CME). Learn on for an examination of the Japanese yen FX and to study extra concerning the fundamentals and key market drivers of Japanese yen futures.

What are Japanese yen futures?

Japanese yen futures are a collection of derivatives contracts supplied by the CME. They’re categorized as an FX itemizing as a result of contract pricing relies on the USD/JPY foreign exchange pair. To cater to its various clientele, the CME lists the Japanese yen FX in full-sized, E-mini, and E-micro codecs.

[1] https://www.bis.org/statistics/rpfx19.htm

Right here’s a fast take a look at the specs of every contract:

Full Sized
Image 6J
Market CME Globex
Amount 12,500,000 Japanese yen
Denomination U.S. {dollars} and cents per tick
Minimal Tick US$0.0000005
Tick Worth US$6.25
Expirations Quarterly (March, June, September, December)
Listings Listed for 20 consecutive quarters
Settlement Bodily supply
Image J7
Market CME Globex
Amount 6,250,000 Japanese yen
Denomination U.S. {dollars} and cents per tick
Minimal Tick US$0.000001
Tick Worth US$6.25 per tick
Expiration Quarterly (March, June, September, December)
Listings Listed for two consecutive quarters
Settlement Bodily supply
Image MJY
Market CME Globex
Amount 1,250,000 Japanese yen
Denomination U.S. {dollars} and cents
Minimal Tick US$0.000001
Tick Worth US$1.25 per tick
Expirations Quarterly (March, June, September, December)
Listings Listed for two consecutive quarters
Settlement Bodily supply

When buying and selling yen futures, it’s necessary to do not forget that pricing is completed in a JPY/USD format. That is the other of the favored foreign exchange USD/JPY pairing. Though yen FX pricing is a bit nuanced by way of numerics, it isn’t a lot completely different from the USD/JPY in terms of valuation.

What do you must know earlier than buying and selling the yen?

Earlier than leaping into the yen FX market with each ft, it’s greatest to grasp what makes the JPY transfer. Though there could also be a variety of underpinnings driving the yen at a given time, three key market drivers stand out: central banking exercise, financial efficiency, and authorities coverage.

Central Banking Exercise

In case you’re going to commerce yen futures, then it’s vital that you just keep abreast of central banking exercise. This implies monitoring the actions of the U.S. Federal Reserve (Fed) and the Financial institution of Japan (BoJ).

Occasions value watching are official BoJ and Fed bulletins, emergency conferences, and public dialogue from members. Maybe the best movers of the Japanese yen FX are financial coverage points, such because the BoJ or Fed elevating or reducing rates of interest.

Financial Efficiency

The relative financial prowess of Japan and the USA is a key market driver of the yen FX. Accordingly, official experiences, comparable to every nation’s gross home product, can carry sudden volatility to the USD, JPY, and yen FX.

A gaggle of important metrics to pay attention to when buying and selling yen futures are Japanese export statistics. Japan depends closely on the export sector for progress, rating quantity 5 globally (US$641.38 billion in 2020) in whole exports. Given its commerce relationship with the U.S., any dropoff on this space generally is a precursor for a weakened JPY.

Authorities Coverage

The insurance policies of the Japanese and U.S. governments can have profound impacts on the yen FX. A couple of current examples are COVID-19 fiscal stimulus packages, the motion towards sustainability, and U.S.-Japan commerce agreements.

When buying and selling yen futures, it’s necessary to remain within the loop with the present political information cycle. Breaking information and shock occasions can form governmental insurance policies, and, in flip, JPY/USD pricing.

Are you able to commerce the Japanese yen FX?

Surely, FX futures furnish lively merchants with many alternatives. Are you able to capitalize on the motion?

If that’s the case, a fantastic place to start is with the StoneX e-book Primary Coaching for Futures Merchants. That includes classes on self-discipline, contract specs, and aim setting, it’s a robust futures market primer. Earlier than you dive headlong into the yen FX, you should definitely obtain your free copy right here.

Download Basic Training For Futures Traders Ebook


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