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Understanding Japanese Yen Futures

January 25, 2022 by Daniels Trading| Tips & Strategies

Understanding Japanese Yen Futures

One of the world’s eight major currencies, the Japanese yen (JPY) is viewed as a mainstay of global finance. The Bank of International Settlements Triennial Survey (2019)[1] has the yen involved in US$1.1 billion in average daily turnover on the over-the-counter (OTC) currency markets. This lofty valuation earned the JPY a rank of third, accounting for 17 percent of daily trade.

In addition to its position on the OTC forex markets, the JPY is also traded on the Chicago Mercantile Exchange (CME). Read on for an examination of the Japanese yen FX and to learn more about the basics and key market drivers of Japanese yen futures.

What are Japanese yen futures?

Japanese yen futures are a series of derivatives contracts offered by the CME. They are classified as an FX listing because contract pricing is based on the USD/JPY forex pair. To cater to its diverse clientele, the CME lists the Japanese yen FX in full-sized, E-mini, and E-micro formats.

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

Here’s a quick look at the specifications of each contract:

Full Sized
Symbol 6J
Market CME Globex
Quantity 12,500,000 Japanese yen
Denomination U.S. dollars and cents per tick
Minimum Tick US$0.0000005
Tick Value US$6.25
Expirations Quarterly (March, June, September, December)
Listings Listed for 20 consecutive quarters
Settlement Physical delivery
E-mini
Symbol J7
Market CME Globex
Quantity 6,250,000 Japanese yen
Denomination U.S. dollars and cents per tick
Minimum Tick US$0.000001
Tick Value US$6.25 per tick
Expiration Quarterly (March, June, September, December)
Listings Listed for 2 consecutive quarters
Settlement Physical delivery
E-micro
Symbol MJY
Market CME Globex
Quantity 1,250,000 Japanese yen
Denomination U.S. dollars and cents
Minimum Tick US$0.000001
Tick Value US$1.25 per tick
Expirations Quarterly (March, June, September, December)
Listings Listed for 2 consecutive quarters
Settlement Physical delivery

When trading yen futures, it’s important to remember that pricing is done in a JPY/USD format. This is the opposite of the popular forex USD/JPY pairing. Although yen FX pricing is a bit nuanced in terms of numerics, it isn’t much different from the USD/JPY when it comes to valuation.

What do you need to know before trading the yen?

Before jumping into the yen FX market with both feet, it’s best to understand what makes the JPY move. Although there may be a wide range of underpinnings driving the yen at a given time, three key market drivers stand out: central banking activity, economic performance, and government policy.

Central Banking Activity

If you’re going to trade yen futures, then it’s critical that you stay abreast of central banking activity. This means monitoring the actions of the U.S. Federal Reserve (Fed) and the Bank of Japan (BoJ).

Events worth watching are official BoJ and Fed announcements, emergency meetings, and public dialogue from members. Perhaps the greatest movers of the Japanese yen FX are monetary policy issues, such as the BoJ or Fed raising or lowering interest rates.

Economic Performance

The relative economic prowess of Japan and the United States is a key market driver of the yen FX. Accordingly, official reports, such as each nation’s gross domestic product, can bring sudden volatility to the USD, JPY, and yen FX.

A group of vital metrics to be aware of when trading yen futures are Japanese export statistics. Japan relies heavily on the export sector for growth, ranking number five globally (US$641.38 billion in 2020) in total exports. Given its trade relationship with the U.S., any dropoff in this area can be a precursor for a weakened JPY.

Government Policy

The policies of the Japanese and U.S. governments can have profound impacts on the yen FX. A few recent examples are COVID-19 fiscal stimulus packages, the movement toward sustainability, and U.S.-Japan trade agreements.

When trading yen futures, it’s important to stay in the loop with the current political news cycle. Breaking news and surprise events can shape governmental policies, and, in turn, JPY/USD pricing.

Are you ready to trade the Japanese yen FX?

Without a doubt, FX futures furnish active traders with many opportunities. Are you ready to capitalize on the action?

If so, a great place to begin is with the StoneX e-book Basic Training for Futures Traders. Featuring lessons on discipline, contract specs, and goal setting, it’s a powerful futures market primer. Before you dive headlong into the yen FX, be sure to download your free copy here.

Download Basic Training For Futures Traders Ebook

Filed Under: Tips & Strategies

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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