We expect the return of Japanese traders to the markets next week to mean the return of volatility. Many of the Yen crosses including AUD/JPY, NZD/JPY, EUR/JPY and GBP/JPY have been trading in a very tight range for the past two weeks and appear primed for a breakout.
Although there is not much data on the Japanese calendar, the release of the Bank of Japan minutes from the meeting earlier this month as well as the scheduled speeches by Fukui and Muto could deliver some volatility. The real catalyst will most likely be the rate decisions elsewhere in the world and the movements of the Dow however. Japanese traders have not had an opportunity to react to some of the moves and next week may be the time that they choose to do so. The Nikkei has been closed all week and the futures indicate a sharply higher open on Monday as the Japanese market attempts to catch up to the US market which may be positive for the Yen.