Everyone is waiting for an end to the tightening cycle, so that's why the dollar is vulnerable.

Japanese institutional investors seem to have sought returns by selling dollar-denominated assets. That kind of repatriation is generally yen positive.

What the current deficit does is make the dollar vulnerable. It means we could see a vicious cycle, where a declining dollar makes U.S. assets less attractive to foreign investors, which weakens our assets further, which puts further pressure on the dollar.

The trade surplus figures showed strong exports and domestic demand. This shows the economy is robust enough to withstand a rate increase later this year, supporting the yen.

The markets have already priced in at least one rate hike and are beginning to price in the second rate hike by year-end. Combined with the steady recovery of the Japanese economy, those expectations are likely to push up the yen.

Press reports are pointing to a BOJ move as early as March, but I think the majority of market participants don't believe that story because such a shift could create volatility before fiscal year-end in March.