Ella 
The yen remained weak on Monday, falling for the third straight session. Traders are preparing for the Bank of Japan’s (BoJ) policy meeting next week, where a rate hike could be on the table to support the yen. Japanese Prime Minister Fumio Kishida said the central bank’s monetary policy normalization would help Japan shift toward a growth-driven economy, Nikkei Asia reported.
Speculative short positions in the yen rose to the second-highest level, but shorts began to fall after Japan surprised the market with a suspected yen-buying intervention this month. Data from the U.S. Commodity Futures Trading Commission showed that as of Tuesday, market participants such as hedge funds held a net 151,072 contracts worth of short yen positions. That was 30,961 contracts less than the previous week, and the biggest drop since May 7, when short positions fell by 33,466 contracts, a separate report from Nikkei Asia showed.
USD/JPY upside may be limited as rising bets on a September rate cut by the Federal Reserve (FED) and lingering concerns about the fragility of the U.S. labor market keep the U.S. dollar (USD) challenged. According to the CME Group’s FedWatch Tool, the market now shows a 91.7% probability of a 25 basis point rate cut at the Fed’s September meeting, up from 90.3% a week ago.
