Japan top FX diplomat says yen shorts that had been built up until July have been unwound

• It is desirable for currencies to move in stable manner, reflecting fundamentals
• No comment on current FX moves
• Hopes that FX will reflect changing phase of Japan economy as it moves out of deflation
• Will respond appropriately if needed

The headline remark is particularly interesting, as it matches up with what BOJ governor Ueda said last week here. Are they trying to soothe markets? Or are they looking to try and slowly turn the page from the early August episode? If so, the next step will be to claim that markets are looking more stable now that yen shorts have been “flushed out”.

This article was written by Justin Low at www.forexlive.com.