USD/JPY: awaiting full markets, consolidated on Abenomics 2.0

USD/JPY is consolidated at the mid-point of the 105 handle driven lower by the anticipation of Abenomics 2.0, with new monetary and fiscal stimulus. 

" The Abenomics trade was short yen and long Japanese equities.  This had been unwound and helps explain the yen's strength in H1 16," explained analysts at Brown Brothers Harriman. "However, expectations of new and aggressive stimulus (captured in the talk of "helicopter money"), some participants are again selling the yen and buying Japanese stocks (the Nikkei advanced 9.2% last week)." 

For the week ahead, eyes will remain on Brexit and developments in Turkey while otherwise, it is likely to be a quieter week with few catalysts, but equally, US data has been improving of late and markets will be looking out for Fed chat and ideas of a Fed hike for 2016. 

USD/JPY levels

The JPY106.70-JPY106.85 area is an important hurdle for the dollar as explained by the analysts at BBH.  "A convincing break could signal a recovery toward JPY110, which is about a 50% retracement of this year's move."